The oil spill highlights the dangers of Singapore’s maritime ambitions

Welcome back. Today we focus on a story that provides a window into the push to clean up the broader global transportation industry—and the tensions and dilemmas that may plague national efforts to ride the waves of the energy transition—with Mercedes Ruehl reporting from Singapore.

Meanwhile, on the other side of the world, it has been a mixed season for sustainability-related resolutions at US shareholder meetings. We digest some of the key numbers.

Have a great weekend – see you on Monday. – Simon Mundy

Green fuel

Pollution risks of Singapore’s bunkering strategy

Singapore’s beaches and coastal parks have been remarkably quiet in recent days. The city-state’s southern coastline became a sea of ​​black after a dredging boat hit a bunker vessel on June 14, spilling more than 400 tonnes of oil into the ocean.

The strong smell of kerosene has hit residents of the mostly man-made tourist island of Sentosa, which many billionaires call home. A cleanup is underway, but it could take months to fully clean up.

Singapore is an integral part of the global shipping industry given its strategic geographical location. It is one of the world’s largest and most important centers for bunkering – that is, supplying ships with fuel.

But the latest oil spill highlights the dangers of being an active port. The Singapore Strait is one of the world’s busiest sea lanes and remains vulnerable to oil spill accidents like the June 14 incident. As Singapore tries to maintain its position in the industry by becoming a leader in green bunkering, the transition could expose the city to further risks.

Green bunkering involves supplying ships with alternatives to fossil fuels, such as methanol and ammonia. These substances come with much lower carbon emissions than the petroleum-derived fuel oil used by most marine vessels, but are highly toxic if spilled into the sea. A 2022 study led by the Environmental Defense Fund found that an ammonia spill could have more severe impacts on fish than an oil spill of comparable size, although it would not persist as long in the environment.

The world’s first journey using ammonia as a transport fuel, carried out by Australian miner Fortescue Metals Group, left Singapore in May. The city carried out the first ship-to-container methanol bunkering for Maersk last year. The government said last month that it is ready to offer full-scale commercial operations for the bunkering of methanol as a marine fuel.

The commercial benefits of Singapore being a green bunkering hub are obvious. Sales of biofuel blend bunkers increased to 520,000 tons in 2023, more than triple the 140,000 tons in 2022. Total business spending by major marine companies overseen by the Maritime and Port Authority of Singapore reached more than 3, S$2 billion to S$3.2 billion (S$3.2 billion), from S$4.3 billion a year earlier.

The International Maritime Organization, the UN’s maritime body, is set to introduce stricter emissions rules for the shipping industry – which accounts for 3 percent of global carbon emissions annually – from 2027. Companies around the world are testing the use of methanol, ammonia and hydrogen to comply with some of these new regulations.

Singapore is investing even after the green push. Singapore’s Maritime Decarbonisation Plan, launched in 2022, was designed to support the development and commercialization of new technologies, with $300 million committed to initiatives over the next decade.

MPA is working with industry and the investment community to fund start-ups in this space, with around S$68 million raised for 116 start-ups by the end of 2023. MPA and the Maritime Institute of Singapore contributed S$19.3 million in funding to universities and research institutes in 2023 for maritime R&D in the development of smart ships and green technology.

However, testing these new fuels – which also include green hydrogen – opens Singapore up to more accidents as well as lucrative business. It doesn’t take many incidents like June 14 to move public opinion on this issue. Studies on the effects of an ammonia or methane leak are still ongoing, but there are already concerns in the industry about their potential risks to both humans and marine ecosystems. Singapore can hope the risk is worth the reward. (Mercedes Ruehl)

shareholder proposals

Shareholders’ interest in social issues rises higher

This year’s shareholder meeting season is drawing to a close, and some interesting trends are already evident in the data. Check out this chart using data from investor intelligence firm Georgeson, showing the proposals voted on since June 20 at companies in the Russell 3000 — an index designed to include the 3,000 largest U.S.-listed companies.

The number of shareholder proposals related to social issues has continued to grow, with notable increases in resolutions around AI and health issues. In contrast, proposals related to governance and the environment have fallen slightly, despite an increase in biodiversity resolutions.

Meanwhile, there has been a huge increase in proposals against the environmental, social and governance agenda, doubling so far this year from the same period in 2022.

But if we look at the support rates for these resolutions, we see a different story:

There is much more support for governance-related proposals than for other categories, with environmental and social proposals suffering a steady decline in support. This echoes complaints from major asset managers about a range of climate-related proposals that they view as unduly restrictive for company management.

Investors are clearly much more critical in their response to anti-ESG resolutions, which have had an average support rate of just 2.3 percent so far this year. (Simon Mundy)

Smart reading

Is targeted taxation of the ultra-rich a good idea and how might it work? Martin Sandbu makes the case.