How the climate crisis discussions could reshape Asia Pacific trade
COP28 Session Recap
Collaboration. Decarbonisation. Sustainability. These are some of the key themes at the COP28 climate talks in the United Arab Emirates; themes that demand cross-sectoral cooperation.
Discussions in Dubai could help reshape shipping and supply chain operations thousands of miles away, as the world seeks a route to net zero emissions.
Implementing green corridors, the announcement of new collaborations and partnerships and the role of financial institutions can help accelerate Asia Pacific’s transition to more efficient, sustainable and fair supply chain operations.
As you might expect, decarbonisation has been a recurrent theme at the talks, including embracing green corridors to enable a safe and sustainable energy transition for shipping and accelerating uptake of clean marine fuels within the industry.
Green corridors are route-based action plans that can help kickstart decarbonisation and ensure an inclusive transition. The concept brings together governments, ports and shipping industry stakeholders – from fleet operators to the bunkering fuel supply side – to connect remote locations with centres of demand in the region.
“We're going beyond just point-to-point corridors, these could be multi-port corridors. These could be clusters. These could also be routes where you're transporting energy,” Ahila Karan, Decarbonisation Analyst at Lloyd’s Register, told delegates at the Voyage to Net Zero Forum, hosted by the Maritime Ports Authority of Singapore.
This includes collecting data and analysing preferred clean fuel strategies, deciding which port and infrastructure investments are most beneficial and determining the preferred beneficial path to decarbonisation for shipping in the region.
The Singapore Green Corridor Cluster brings together players across the shipping sector, to build a consensus for action to move towards a decarbonisation action plan.
Collaboration on decarbonisation
“Driving sustainable and efficient trade routes in Asia Pacific is vital to our work as a key logistics operator in the region,” said Glen Hilton, CEO and MD for DP World, Asia Pacific.
The COP28 talks provided a fitting opportunity for us to sign a Memorandum of Understanding with Singapore's Pacific International Lines (PIL) to develop solutions that will decarbonise global shipping and further enable the Singapore-UAE Green Corridor.
The collaboration underpins both companies’ commitment to combatting climate change and the collective goal of achieving net zero greenhouse gas emissions by 2050 or earlier.
A trial to reduce the greenhouse gas footprint of shipments between our Jebel Ali Port in Dubai and destinations within PIL’s shipping network aims to harness the power of biofuels and renewable energy for trade routes in Asia Pacific and beyond.
Looking to the future, the partnership is set to include other ports in our global network – which handles around 10% of the world’s container traffic – and embrace other no- and low-carbon fuels like e-LNG, green methanol or green ammonia to help reduce shipping, port and transport emissions.
Finance in transition
The role of finance in the transition to a cleaner future was discussed at the Organisation for Economic Co-operation and Development (OECD) session: Unlocking capital for net zero in Asia and beyond: Challenges and solutions on transition finance.
“Companies need to take a long-term perspective when they assess the feasibility of various technological options for investment. And to properly assess the risk of carbon lock-in, we have to project the benefits and the costs over the lifetime of the asset,” said Mathilde Mesnard, Deputy Director and OECD co-ordinator for climate and green finance for the environment directorate.
This gives a true reflection of the potential transition risks and can help companies make informed investment decisions when aiming to improve their supply chain sustainability.
Many companies in Asia Pacific are committed to minimising global temperature rises, but many others are not, said Justin Wu, Co-head of Climate Change Asia Pacific at HSBC. Financial institutions can play an important role to engage these companies and gear their investments towards a more sustainable future.
“To achieve net zero, you can't really leave anybody behind, because if you leave somebody behind, they're going to still continue emitting. And that’s not going to solve the problem,” said Wu.
Collaboration in finance, as in other activities, is essential to achieve net zero emissions.
“Financial institutions both have the motivation to be a key lever in transition. And they have the means,” said Gillian Koh Tan of the Monetary Authority of Singapore.
These institutions are in a unique position to act in their role as lenders or investment underwriters, to raise a customer’s climate risk awareness and encourage them to implement robust risk mitigation.
“Engagement not divestment, that is key,” said Koh. “You need to engage your clients and help them work through their carbon footprint, partner them in that decarbonisation process,” she said.
We have long been championing investments in industry-leading technologies to boost the sustainability and efficiency of supply chain operations, for example.
Smart operating systems have been deployed at terminals like our ATI Batangas in the Philippines to keep cargoes flowing efficiently and minimise emissions.
Collaboration is key to enhance efficiency and sustainability of supply chains, to integrate the technology, regulatory framework and finance required to embrace a net zero future.