Monday April 29, 2013

Green agenda in maritime sector

Comment by NAZERY KHALID

THE unmistakably growing international attention on environmental custodianship and sustainable development is increasingly prevalent in the maritime sector.

Various policies, conventions, processes and technologies are in place – and no doubt will continue to be introduced and developed – to enhance environmental protection from marine-based pollution, to manage marine-based resources and mitigate the effects of climate change and global warming.

The shipbuilding and ship repairing sector is also not spared from this global trend of increasing environmental awareness.

One major development related to shipyards is the introduction of the Ship Recycling Convention adapted in May 2009 known as the Hong Kong Convention by the International Maritime Organisation (IMO). The Hong Kong Convention is aimed at minimising environmental and occupational health risks of ship recycling. Its introduction is in line with the ‘green movement’ in the shipping sector that focuses on the conduct of shipping in an environmentally friendly way and for players in the sector to reduce their green house gas (GHG) emissions and carbon footprint.

The Hong Kong Convention promotes what is known as ‘green ship recycling’ which features measures to ensure activities involved in the recycling of ships are done in an environmentally friendly manner. They include scrapping (or breaking), retrofitting and conversion of the ships.

When it comes into force, which may take several years, the Hong Kong Convention requires that owners of existing and newly-built ships come up with a plan to identify, locate and list these materials and wastes onboard their ships. Potentially lucrative

The demolition of ships is not just a function of decommissioning them at the end of their shelf-life. This activity is important in maintaining the demand and supply of vessels to ensure profitability for shipwoners. Even ‘good’ and new ships are sent to be scrapped, as seen in recent years when the shipping markets slumped amid the global recession.

Most Malaysian shipowners send their ships to shipbreaking yards in China, India and Pakistan which dominate the global shipbreaking industry. Few, if any, Malaysian yards are involved in the breaking of large, ocean-going vessels.

Most yards in Malaysia undertake design, building, repairing, refurbishing, retrofitting, conversion and modification of ships and marine engineering structures.

The nature of shipbreaking is just one of the key factors that turn off local shipyard operators from undertaking the activity.

Others include the fact that Malaysia cannot compete with the low labour cost of the leading nations in shipbreaking, and the lack of incentives for local yards to undertake this rather ’unsexy’ business.

While there are no official figures on how much local shipowners spend to send their ships to be demolished at foreign yards, the cost is surely not insignificant if one were to accumulate it over the years.

Surely it would be ideal to stem the foreign exchange outflow incurred from sending the ships to be broke abroad by doing it here at home.

There are technologies available that enable ships to be scrapped and recycled in an environmentally sound way. They are so efficient and clean that even yards in European countries know for stringent environmental and emissions regulations have no qualms about undertaking them. In fact, they have been at the forefront of carrying out R&D in green ship recycling and promoting advanced GSR operations with state-of-the art facilities and systems and skilled workers.

And there is no reason why Malaysian yards should not give a look-in at green ship recycling. Done in the right way, it can yield handsome profit and sustainable business for the yards, given that shipbreaking and recycling are activities that are ongoing in good and bad times in the shipping markets.

There is also a range of other compelling reasons beyond environmental custodianship for local yards to consider partaking in green ship recycling. Sub-standard ship recycling leads to accidents, pollution, environmental damage, fines, reputation damage, public criticism and loss of business for yards. It also leads to cost- and resources-saving as parts salvaged in an eco-friendly manner can be reused for new ships.

Yards with green features can attract business from like-minded entities and those who share a similar ‘green philosophy’. Yards operating in an environmentally friendly and sustainable manner can develop a positive corporate image that can translate into loyal customers, new clientele and long-term profitability.

Judging by the examples of yards in Europe which undertake green ship recycling, there is little not to like about this activity. It promotes safety, environmental custodianship and innovation, and it attracts private sector investment. It is also technology-driven and knowledge-based and can generate high income and margins for the yards.

These are exactly the criteria promulgated by the New Economic Model to transform Malaysia into a fully developed economy by 2020. As such, support from the Government, for example by way of introducing incentives, is warranted to encourage local shipyards to carry out green ship recycling.

Recycling

Green recycling is not just about handling of hazardous materials, though. It also entails offering safe working environment for workers at shipyards undertaking ship demolition/breaking. Some ship managers have designated several yards to carry out green recycling where demolition works at the yards are supervised by ship management companies’ personnel who are authorised to stop works if they do not comply with green recycling procedures and rules. Aspects such as fire fighting, search and rescue and evacuation are also given attention to in green recycling. This growing awareness by shipowners to scrap their vessels in an environmentally-friendly way also drives yards to ‘go green’ and creates a virtuous cycle to both parties, and to the environment and public at large.

With the coming into force of the Hong Kong Convention, shipowners are stepping up efforts to make the necessary changes in terms of the way they build and scrap ships. Several countries have capitalized on this and have entered into the green ship recycling business, including developing countries like China and India. Malaysian yards should seriously consider getting into this game as efforts and preparation for the shipping industry to operate in a low carbon environment have begun in earnest.

Malaysia has announced its commitment to reduce its GHG emission by 40% (compared to 2006 levels) by 2020. The shipping sector, which facilitates 95% of the nation’s trade, must play its part to help realise this target. Local shipyards can contribute to this by undertaking green ship recycling, which is an idea whose time has come and will soon be here to stay.

As such, shipowners and shipyard operators must infuse the green philosophy into their business processes and strategies. The days of shipowners sending their ships to be beached and broken at yards with poor environmental and safety records in order to reduce their costs and maximize their profits are almost numbered, as international pressure grows on the shipping sector to clean up its act.

·Nazery Khalid is a senior fellow at the Maritime Institute of Malaysia and the opinions expressed are the author’s own.