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This week's focus highlights the growing dependence of Southeast Asian countries, particularly Vietnam and the Philippines, on dry bulk coal imports. As these economies expand, their energy demands are rapidly increasing, and coal remains a crucial component of their energy mix, despite global efforts to transition toward cleaner energy sources. Data from 2023-2024 reveals a substantial surge in coal shipments to Vietnam and the Philippines compared to 2021-2022. Australia stands out as the top supplier of coal to Vietnam, commanding a 40% share of total shipments. Meanwhile, Indonesia dominates coal shipments to the Philippines, capturing a 90% share of the country's total coal imports. As the world's largest exporter of thermal coal, Indonesia plays a critical role in meeting the Philippines' energy needs. In January, we highlighted the substantial decline in Russian coal shipments to China.
This week's focus is on the increasing dependence of Southeast Asian countries on dry bulk coal flows, particularly as China and India are expected to reduce their share in the coming months. Southeast Asia is becoming a critical growth region for coal demand, even as global efforts to transition to renewable energy intensify. The energy industry has already identified countries such as Vietnam and the Philippines as key players set to expand their coal trade and consumption throughout this decade.
While demand from top consumer China is projected to approach its peak, Southeast Asia is seen as the new frontier for coal growth. Power generation in Vietnam, in particular, stands out as the most promising growth market. With Vietnam being the fastest-growing economy in Southeast Asia, its reliance on coal to fuel its rapid industrialization and urbanisation is expected to rise. The Philippines, similarly, is ramping up its coal imports to meet the increasing energy demands of its population and economic expansion.
As shown in the graphs above, the quarterly quantity of coal tons sent from all origin countries to Vietnam and the Philippines has recorded significant growth during the 2023-2024 period compared to the volumes in 2021-2022. This trend indicates a notable shift in regional coal consumption patterns, driven by both the expanding energy needs of these developing economies and the relative affordability of coal compared to alternative energy sources.
Southeast Asia’s growing demand for coal has broader implications for global energy markets. With China and India scaling down their coal consumption in favour of cleaner energy sources, coal suppliers will increasingly turn to Southeast Asia to maintain trade volumes. The region's reliance on coal, however, raises concerns about its carbon footprint, potentially placing these countries at odds with global climate targets. Still, in the short to medium term, coal will remain a cornerstone of Southeast Asia's energy strategy, providing an affordable and reliable source of power as these countries seek to balance economic growth with energy security.
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Creating a sustainable world requires us to embark on a journey towards a zero emission future, where every step is a commitment to preserve our planet for future generations.
Albert Greenway
Environmental Scientist, Sustainability Expert
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Increased Use of Renewable Energy:
Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.
Collaboration and Industry Partnerships:
Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.
To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.
Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.
Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.
Creating a sustainable world requires us to embark on a journey towards a zero emission future, where every step is a commitment to preserve our planet for future generations.
Albert Greenway
Environmental Scientist, Sustainability Expert
Increased Use of Renewable Energy:
Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.
Collaboration and Industry Partnerships:
Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.
To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.
Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.
Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.
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