The City of Newcastle was host to the first ever GreenPort Congress in the Southern Hemisphere, writes Paula Wallace.
From 15 to 17 February 2023, the conference brought port operators together with all players in the maritime supply chain to discuss global and regional sustainable practices.
The event was an opportunity for the Port of Newcastle, among others, to showcase its sustainability efforts and achievements.
Located more than 150 kilometres north of Sydney, the city is home to the biggest coal exporting region in the world and discussions centred around the port’s strategy of diversification and use of sustainability-linked finance options.
Port of Newcastle CEO Craig Carmody, told conference delegates: “It’s beholden on all of us to prepare for the future” adding this needs to be done in a “sustainable, resilient and methodical way.”
Port of Newcastle’s business strategy is for “50/50 by 2030”, that is 50% of revenue should derive from non-coal sources by the end of this decade. Currently the split is 31% from non-coal trade, up from 11% in 2018.
“Four years ago… we were losing banks because we were the world’s biggest coal port. And we’ve worked over four years to change that. So if a port as big as ours in coal can change, this idea that transition is too costly is absolute nonsense.”
As it stands, coal has made the Port of Newcastle critical to the success of the state of New South Wales’ economy, contributing AUS$70 billion in trade and providing 10,000 jobs.
“We are the single largest revenue source for the State Government. So, we can do all this [diversification] and we don’t put at risk our role or the economy of NSW,” Mr Carmody said, adding the port handles 160+ million tonnes of coal per year.
“And we don’t know when coal will end, nobody knows. We are getting ready now… for that inevitable day,” he said.
As he rightly pointed out, “you can’t overnight find 160 million tonnes of something else.”
“So what we’re doing is creating new business opportunities at the port while we can afford to do so. We do it with a plan, not in a crisis.
Creating a level playing field
The opening panel session canvassed views from port operators, shipping lines and freight forwarders, including insights from two small island developing states.
While there was discussion around innovation, collaboration and alternative fuels, the topic of levelling the playing field for investment in decarbonisation took centre stage.
Maersk’s My Therese Blank said there was an opportunity for more to be done at the level of the International Maritime Organization (IMO), specifically “market-based measures to cover the competitiveness gap between the fossil fuels and the green fuels” by 2025. Maersk would also like to see a strengthening of emissions reduction targets.
However, Ms Blank said there was a great opportunity for industry to make a difference.
“In 2022 there was only 30,000 tonnes of green methanol produced globally.
“We have signed eight partnerships already to enable 750,000 tonnes to be available in the next two years.
Mr Carmody commended the work of the IMO but said creating level playing field for decarbonisation needed to be based on scientific targets.
“It’s not for people to come up with their own idea of what success looks like. It has to be science-based, target-based, it has to tie in with international targets that have been agreed to.
“Those of us in the first world… are going to have to do some of the heavy lifting.
“The truth is, if we are going to do this we’re all going to have to pull ourselves up and some of us are more capable based on our wealth, to do that,” he said.
This was a sentiment mirrored by PNG Ports and the Solomon Islands Port Authority.
“We will follow the guidelines of the IMO as a guide only. It’s what we can manage within the resources we have,” said Rodney Begley, acting CEO of PNG Ports.
The organisation has “conflicting challenges” in meeting the needs of the community in a country with 95% unemployment and limited education, and the demands of the government as a state-owned enterprise.
“Sustainability is a blessing and a curse and how we manage that,” Mr Begley said.
He said sustainable action is currently focused on “low hanging fruit” and factors over which the port has control such as efficiency of vessel unloading, truck turnaround times and shore-based power.
Eranda Kotelawala, CEO of Solomon Islands Ports Authority said, “We need support… around 80% of infrastructure in Pacific ports is more than 50-60 years old.
“We do a lot to mitigate climate change from our perspective, but probably not enough.
“We look globally at what ports are doing and we try to learn from them,” he said.
Available solutions
Several sessions at the conference focused on the relationship between ports and other supply chain players in decarbonising shipping.
One avenue for the cruise industry to reduce its carbon footprint is through the use of shore power.
Cruise Lines International Association (CLIA) members have committed to equipping their vessels to connect to shore-side electricity facilities wherever available at ports “as soon as possible but no later than 2035”, according to the association’s managing director, Joel Katz.
“Right now, 40% of global capacity is already fitted to operate on shore-side electricity, which is a 20% increase over the last year.
“Of newbuild capacity, 98% is either committed to be fitted with shore power or be configured to add shore power in the near future.
“But… only 29 ports around the world currently offer us the ability to use shore power in at least one berth,” he said.
Taking up the call for shore power is the Port Authority of NSW. The organisation will deliver a world-first 100% renewable electricity shore-powered precinct and first shore-powered cruise terminal in Southern Hemisphere.
Shore power will be one of the biggest contributors to the port authority achieving its goal of net zero emissions by 2040 with a focus on Scope 1 and 2 emissions (and 75% emissions reduction by 2030).
CEO of the Port Authority of NSW, Philip Holliday said: “It will be the first bulk precinct in the world to operate with that capability.”
The port authority will provide 100% renewable shore power for cruise and bulk terminals at White Bay and Glebe Island by 2024. It is investing AUS$60 million in renewable shore power in the region, reducing ship carbon emissions by 14,000 tonnes per year or the equivalent of planting 70,000 trees.
Carbon neutral towage was another topic of discussion. Svitzer Australia’s Ivan Spanjic said the Australian Government and industry partners need to take action to make biofuel a feasible option in the region.
He said carbon-neutral towage operations in the country would not be possible by simply building different kinds of tugboats.
Svitzer will bring around 180 new tugboats into service by 2040, less than half its global fleet.
“The horrible truth is that we’re not going to get there by building, we can’t build our way to a sustainable future,” Mr Spanjic said.
“It’s going to require the optimisation of our existing assets, a switch to biofuels and rapid introduction of low or zero emission power sources.”
While tugboats may account for only 4% of total shipping carbon emissions globally, that’s still around 40 million tonnes of CO2 or the equivalent of seven million cars per year.
Today’s solution is biofuel but uptake is hampered by gaps in the supply chain in terms of infrastructure, policy and legislation.
“Everyone talks about methanol which we also subscribe to, we also talk about batteries, but biofuel is just as effective, it’s just not as well known,” he said.
Green finance
Many delegates were keen to hear about green financing options for the maritime sector and they were rewarded with a comprehensive session on the topic on the second day of the conference.
The Port of Newcastle has undertaken three sustainability-linked transactions in the last two years. The organisation’s CFO, Nick Livesey, said: “Now more than ever we’re seeing lenders use their power and influence to drive sustainable behaviours and actions.
“That’s a good thing, it’s positive and I think the key message is, ‘banks might be doing it now, but it will broaden into other areas like customers and suppliers’ and we’re already seeing it with insurers.”
Sustainability-linked lending involves attaching targets or KPIs (key performance indicators) to a loan instrument that impact the price of that loan.
“For example, you might have a target to cut Scope 1 emissions over a number of years… so you’ll have staged [emissions] reductions over that seven years,” Mr Livesey said, adding that challenging targets are advisable but should also be achievable.
For AUS$515 million in bank debt in April 2021, Port of Newcastle had five KPIs linked to the loan: reduction in Scope 1 and 2 emissions, screening suppliers for modern slavery, providing internships for Indigenous students, mental health training for staff and achieving improving status with Sustainability Advantage (NSW Government agency).
Later loans for the port included annual targets for diversification away from reliance on coal revenues, and targets around Scope 3 emissions.
In answering the question of whether green financing works, Mr Livesey said cynics may see it as a public relations exercise and there may be some truth to this.
“However, this is now getting so commonplace, having sustainability terms in loan instruments is becoming standard.
“To that end, it will apply to everyone and then frankly, do you care about the motivation?” he asked.
“It still gets the action happening,” Mr Livesey said. “If everyone is cutting their Scope 1 and 2 emissions, influencing their supply chain on Scope 3, pushing diversity and inclusion, then the change is happening and for the better.”
