Shipping : Malaysia’s lifeline
Shipping, which transports 90 per cent of global trade, holds economic and environmental advantage over other modes of transport. Hence, the reliance on ocean shipping is expected to rise with increasing trade volume.
Seaborne transportation is a key facilitator of Malaysia’s trade-oriented economy. This is underlined by the fact that an estimated 95 percent of the country’s trade is carried via seaborne means. Malaysia contributed 12.44 mil. DWT (deadweight tonnage) or 1.07% to world merchant shipping tonnage, and in MISC, it has the world’s largest owner-operator of LNG tankers.
The nation’s ports, which handled a total of 17 mil. TEU (twenty foot equivalent unit) containers, act as pulse points to its economic heartbeat. Two of its ports, Port Klang and Tanjung Pelepas are in the list of the world’s top 20 container ports by way of throughput volume handled.
By virtue of this, the shipping sector in particular and the maritime industry in general play very important roles in contributing to the country’s economic growth and wellbeing.
Maritime passages and waterways act as the lifeline for Malaysia’s economy and trade, and their predominant role is set to continue into the future. Underscoring this, the Straits of Malacca, one of the world’s busiest sealanes which borders Peninsular Malaysia, recorded over 77,000 ship movements in 2010.
This figure is expected to increase further in the years to come as Malaysia’s trade volume and global seaborne trade grow.
Two sides of the coin
From an economics and business point of view, the expected increase in shipping traffic along the Straits can be seen as a positive factor as it will lead to bigger trade and economic growth for the country. This in turn will generate positive multiplier effects to the development of the nation’s maritime industry.
On the flipside, increased shipping activities can pose a hazard to the maritime environment. Despite shipping contributing to only 3.5% of global carbon emission in the transportation sector, practitioners in the industry must not be complacent into thinking that their business can seek comfort in the fact it is not a major ‘climate change culprit’.
True, there are high standards and various rules and regulations governing shipping to ensure environmentally friendly operations and business practices. However, given the increasing concern over the issue of climate change, shipping practitioners must stay on their toes and play their part to help address and mitigate this growing phenomenon.
Ships use bunker fuel and diesel engines, hence release into the atmosphere carbon dioxide (CO2) which has been identified as one of the contributors to global warming. At present, no targets have been set to limit or reduce CO2 emission from ships.
According to the International Maritime Organisation (IMO) Experts’ Group report, the emissions from shipping have been growing rapidly in recent years. Although ships emitted much less greenhouse gases compared to other transport modes like road and air transport, the shipping industry cannot afford to ‘gloat’ in this fact.
The International Maritime Organization (IMO) has estimated that total ship emissions of CO2 will increase in the absence of intervention in current shipping technologies and improvement in operating efficiencies of ships.
According to a study which it commissioned, the shipping industry contributed to approximately 2.7 percent of annual global green house gas emission. In the absence of regulation, emission from shipping is predicted to rise to 6 percent of the total global emissions by 2020.
Combating climate change : Malaysia to the fore
Pressure for international action to combat climate change is building. Following the United Nations Conference on Climate Change (COP 15) held in Copenhagen in December 2009, the world has been awakened to the grim prospect of a warmer world which could wreak havoc to the weather and atmosphere. If no concrete and sustainable measures are taken to address this issue, climate change could lead to adverse effects to the world and untold misery to human beings.
During COP15, Prime Minister Dato’ Seri Najib Tun Razak made a commitment for Malaysia to cut down its carbon emission by 40% to 74.8 million tonnes CO2 equivalent by 2020 compared to 2005 levels (187 million tonnes CO2 equivalent).
Arising from this announcement, serious efforts must be undertaken if Malaysia is to attain this lofty target. All parties and industries must make the issue of reducing carbon emission as a priority and must aim to put in place measures to reduce or limit the growth of CO2.
This applies to the shipping industry as well: one way or another, industry players must prepare themselves for a lower carbon future and that future could be coming sooner than they think. Being a key facilitator of trade and a frontline activity that enables much of the nation’s trade and oil and gas industry, Malaysia’s shipping industry must play a leading role in helping the country attain its emissions target as spelled out by Prime Minister Najib.
There have been studies conducted and ideas proposed to cap the emission from shipping, but even those developed by IMO haven not seen light of day due to technical issues, funding limitations, political roadblocks and other obstacles. However, the industry cannot afford to wait until a deal is brokered and accepted by all and sundry before taking concrete steps to reduce emission.
As seen during and after COP 15, and even COP 16 in Cancun, Mexico in late 2010, it will take some time before any sort of decisions that will change the fundamentals of the industry be made and agreed upon. In the meantime, there will be more emission coming from ships and there will be significant economic impacts arising from the debate to ‘go green’ in the shipping industry.
With this in the background, Malaysia as a major maritime nation and as a member of the IMO Council, should start to work outside the IMO spectrum to green its shipping industry. Concerned parties such as Malaysia Shipowners Association, Ministry of Transport and research institutes must assess ways in which the Malaysian shipping industry can contribute to ‘disciplining’ itself as a responsible industry and to meet the national goal of cutting down carbon emission by 40% by 2020.
To meet this daunting but certainly achievable target, Malaysia has its work cut out for it. Various aspects such as law, technology, financing, human capital and business practices, among others, must be explored to find solutions towards greening the nation’s shipping sector without waiting for international legislations and measures to be introduced, which will take a long time.
The long voyage ahead
In its efforts and enthusiasm to ‘go green’, Malaysia must also evaluate how greening efforts will affect Malaysia’s shipping lines and the industry as a whole, especially from an economic perspective. This is essential to ascertain whether shipping lines will gain advantage or be disadvantaged by going the extra mile to practice ‘green shipping’ beyond what is already required by domestic laws and international conventions.
While waiting for legally binding measures to be introduced, the stakeholders in shipping must find ways to reduce emissions from ships that pass through buys and critical sealanes such as the Straits of Malacca which borders Malaysia. It is never too early for the Malaysian shipping players and agencies to put on their thinking cap to come up with a set of policy options that encourages ‘green practices’ among the shipping industry practitioners.
For Malaysia to realise its ambitious emissions target, it must not wait for international efforts and must mobilize its own efforts towards helping the Government to meet its objective of reducing the nation’s carbon footprint within the next decade.
As a responsible maritime nation and a council member of IMO, much is expected of Malaysia to ‘green’ its shipping sector. With its headline grabbing emissions target, it has talked the talk. It must now walk the challenging walk to realise its ambition of reducing its carbon footprint, and the spotlight will train brightly on its shipping sector to help deliver the target.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Asian Power. The author was not remunerated for this article.
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Nazery Khalid is a Senior Fellow / Research Coordinator at Maritime Institute of Malaysia.