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From Archipelago To Anchor: Building a Greener Maritime Industry

Wednesday, 05 June 2024 09:30 AM

The Indonesian example

NORTHAMPTON, MA / ACCESSWIRE / June 5, 2024 / A global challenge, a regional response

As the world celebrates World Ocean Day 2024, Indonesia takes center stage for its pioneering efforts towards sustainable shipping. This archipelagic nation, the world's largest with over 18,110 islands (Adyasari et al., 2021), faces a challenge echoed across the globe: balancing the economic importance of a thriving maritime industry with the environmental responsibility to protect our oceans.

Within the Association of Southeast Asian Nations (ASEAN), a region heavily reliant on maritime trade, the need for sustainable shipping practices is particularly acute. The busy shipping lanes of the South China Sea and the Malacca Strait serve as vital arteries for commerce, connecting not only ASEAN nations but also Europe, the Middle East, and beyond. However, these same routes raise concerns about environmental pollution. Recognizing this shared challenge, ASEAN member states have begun collaborative efforts to promote sustainable maritime practices, from cleaner fuels to improved waste management. Indonesia's leadership in this area positions it as a key player in fostering a more sustainable future for global shipping.

Indonesia is a prime example of a nation taking decisive action. Bustling ports like Tanjung Perak in Surabaya, East Java, exemplify the vibrancy of its maritime industry. However, conventional shipping practices also pose a significant threat to the very resources that fuel Indonesia's economic success. Pollution from shipping activities, particularly in busy straits like Malacca, can harm delicate coral reefs, mangrove forests, and seagrass meadows - ecosystems that not only support marine biodiversity but also act as vital carbon sinks (Adyasari et al., 2021). Recognizing this critical link, Indonesia is charting a course for a sustainable future by pioneering innovative approaches to shipping.

A strategic hub in the booming Southeast Asian market

Indonesia's strategic location within Southeast Asia, a region experiencing a boom in manufacturing and retail, further emphasizes the importance of sustainable shipping. Given its geographical position, any ship sailing within the ASEAN region is likely to navigate Indonesian waters. This centrality makes Indonesia's leadership in sustainable shipping even more crucial.

Indonesia's vast archipelago, stretching across the equator from the Indian Ocean to the Pacific Ocean, grants it a unique geographical advantage (Adyasari et al., 2021). With a coastline exceeding 81,000 kilometers, Indonesia boasts numerous strategic straits, like the Malacca Strait, a vital global trade route connecting the Indian Ocean with the Pacific Ocean and the South China Sea (CIA World Factbook, 2024). This strategic positioning makes Indonesia a gateway for global trade, with a significant portion of the world's maritime traffic funneling through its waters (UNCTAD, 2023).

Indonesia's membership in the Association of Southeast Asian Nations (ASEAN) strengthens its position as a maritime hub. ASEAN, a regional economic bloc with a combined GDP exceeding $3.3 trillion (ASEANstats, 2024), fosters collaboration and integration amongst member states. This collaborative approach allows for the development of standardized regulations, streamlined customs procedures, and improved port infrastructure across the region. As a leading member of ASEAN, Indonesia can play a pivotal role in shaping a sustainable and efficient maritime transportation network within Southeast Asia.

The double-edged sword of shipping: Balancing growth with environmental responsibility

Healthy oceans are the foundation for Indonesia's thriving fisheries and tourism industries, vital sources of income for millions (World Bank, 2020). Sustainable shipping practices are not just an environmental responsibility, but an economic imperative. By adopting these practices, Indonesia can ensure the long-term viability of these vital sectors while minimizing its environmental footprint.

Indonesia's contribution to the problem is significant. Estimates suggest that in 2018, the country was responsible for roughly 3.7% of global shipping emissions, with bulk carriers, tankers, container ships, and smaller industrial ships accounting for a staggering 87% (GMF, 2022). This data underscores the urgency for Indonesia to transition towards cleaner maritime practices, ensuring both economic prosperity and environmental sustainability.

A multifaceted approach to sustainable shipping

Sustainable shipping transcends mere technological advancements; it necessitates a holistic approach that encompasses every facet of the maritime supply chain. Indonesia's commendable efforts demonstrate this multi-pronged strategy:

  • Cleaner vessels and fuels: Optimizing ship design for fuel efficiency and adopting cleaner fuels like LNG are crucial first steps. Initiatives like the Riau Islands' Sustainable Shipping Initiative (SSI) showcase successful route optimization, leading to a significant reduction in greenhouse gas emissions. These efforts align with the International Chamber of Shipping's guidelines, ensuring harmonization with global best practices (International Chamber of Shipping, 2023).
  • Responsible sourcing and eco-friendly packaging: Sustainability begins even before cargo reaches the vessel. Initiatives like those in West Kalimantan, which prioritize responsible forestry practices, ensure a steady supply of eco-friendly packaging materials for the shipping industry. This commitment reflects Indonesia's national goals for sustainable consumption and production, as outlined in its National Action Plan (Government of Indonesia, 2023).
  • Investing in greener ports: Modernization plays a significant role. Indonesia's investments in greener ports with shore power capabilities offer cleaner options for docked ships, significantly reducing emissions. Additionally, improved waste management systems in these ports further minimize environmental impact.
  • Collaboration for collective progress: Indonesia recognizes the global nature of the shipping industry and the importance of knowledge sharing. Active participation in international organizations like the IMO fosters collaboration and allows knowledge exchange with other maritime nations, driving collective progress towards a cleaner future for global shipping.
  • Healthy oceans, thriving economy: The long-term expected benefits are undeniable. By prioritizing sustainable practices and reducing pollution, Indonesia safeguards the health of its oceans, a vital resource for its thriving fisheries and tourism industries. This approach ensures a healthy ecosystem for future generations, contributing to a sustainable and prosperous maritime economy.

This multifaceted approach highlights the strategic pillars of Indonesia's commitment to a greener maritime future. By focusing on cleaner ships, fuels, ports, and packaging, while actively collaborating with the international community, Indonesia is well-positioned to become a leader in sustainable shipping practices.

Example of international collaboration: Indonesia and the UK forge a path towards sustainable shipping

Recognizing the shared responsibility to protect the marine environment and promote sustainable maritime practices, Indonesia and the United Kingdom have taken a significant step forward. In February 2023, the two nations signed a Memorandum of Understanding (MoU) on sustainable shipping and shipbuilding (Puspa and Setiaji, 2023). This landmark agreement marks the beginning of a collaborative effort to enhance the sustainability of Indonesia's maritime sector.

The MoU encompasses a wide range of initiatives, including:

  • Knowledge sharing and capacity building: Both countries will exchange expertise and best practices in sustainable shipping technologies and operations. This knowledge transfer will empower Indonesian stakeholders to adopt more environmentally friendly practices.
  • Technology transfer and innovation: Indonesia and the UK will collaborate on research and development of cutting-edge technologies for cleaner vessels and alternative fuels. This focus on innovation holds the potential to revolutionize the maritime industry and create a more sustainable future.

Challenges and opportunities

While Indonesia's commitment to sustainable shipping is undeniable, its path forward is not without obstacles. Provinces like Papua, with their limited infrastructure and complex regulations, serve as microcosms of the challenges that persist across the archipelago. These hurdles, however, can be reframed as opportunities to push boundaries and foster innovation.

Infrastructure bottlenecks: Underdeveloped ports and inadequate communication networks can significantly hinder the adoption of cleaner technologies and efficient practices. Imagine if remote Indonesian islands could utilize solar-powered charging stations for electric ferries, but a lack of grid connectivity hinders this vision. The World Bank highlights the economic benefits of investing in sustainable infrastructure, particularly in remote areas (World Bank, 2023). Herein lies the opportunity. By prioritizing strategic infrastructure projects, Indonesia can unlock the full potential of clean technologies across its vast maritime landscape.

Navigating regulatory labyrinth: Complex regulations and a lack of harmonization with international standards can create bureaucratic bottlenecks, discouraging investment and slowing progress. Imagine a shipping company eager to adopt cleaner fuels but entangled in a web of conflicting regulations. This highlights the need for streamlining regulations and aligning them with international best practices. By achieving this, Indonesia can create a more transparent and predictable regulatory environment, attracting investment and accelerating the transition towards sustainable shipping.

Harnessing the power of collaboration: The key to overcoming these challenges lies not in isolation, but in collaboration. International organizations, with their expertise and resources, can be invaluable partners. Indonesia's recent agreement with the UK on sustainable shipping and shipbuilding serves as a prime example (refer to MoU reference). Imagine a collaborative effort between Indonesian shipyards and international technology companies to develop next-generation, eco-friendly vessels specifically designed for Indonesian waters. Furthermore, fostering regional cooperation within ASEAN can lead to the harmonization of regulations and the creation of a more sustainable maritime environment across Southeast Asia. By fostering these partnerships, Indonesia can leverage a global network of knowledge and resources to accelerate its progress towards a sustainable maritime future.

By embracing these challenges as opportunities for ingenuity and collaboration, Indonesia can not only overcome the hurdles in its path but also inspire the global maritime community.

Examples of sustainable practices

Indonesia's commitment to sustainable shipping translates into a range of initiatives being implemented across the archipelago. Here are some notable examples:

  • Building sustainable shipping chains: The Riau Islands' Sustainable Shipping Initiative (SSI) stands as a shining example. This collaborative effort, spearheaded by the Indonesian government, shipping companies, and environmental NGOs, focuses on optimizing shipping routes to minimize fuel consumption and emissions. Furthermore, the SSI actively promotes the adoption of cleaner fuels like liquefied natural gas (LNG) or biofuels as alternatives to conventional heavy fuel oil (HFO). This multi-faceted approach aligns perfectly with the International Chamber of Shipping's (ICS) guidelines for reducing the environmental impact of maritime supply chains (International Chamber of Shipping, 2023).
  • Steering towards maritime decarbonization: Indonesia recognizes the crucial role of renewable energy in achieving a sustainable maritime future. The Bali Clean Energy Initiative (BCEI) exemplifies this commitment. Launched in 2022, the BCEI is a collaborative effort between the Indonesian government, international organizations, and private entities. This initiative focuses on transitioning maritime transport in Bali, a major tourist destination, to renewable energy sources such as solar and wind power. The BCEI's vision aligns with the recommendations set forth by the International Energy Agency (IEA) in its report, "World Energy Outlook 2023" (International Energy Agency, 2023).
  • North Sumatra's investment in eco-friendly vessels: North Sumatra, a crucial gateway for trade and a center for shipbuilding, is another frontrunner in sustainable shipping practices. The provincial government, in collaboration with local shipyards, is actively investing in the construction of new, energy-efficient vessels. These vessels incorporate innovative design features and cleaner technologies, such as advanced air lubrication systems that reduce drag and improve fuel efficiency. This commitment to a greener maritime future positions North Sumatra as a leader in sustainable shipbuilding within Indonesia.
  • Adding to Indonesia's efforts, PT Pertamina International Shipping (PIS), a subsidiary of the state-owned energy company Pertamina, plays a significant role in promoting sustainable practices within the shipping industry (refer to Pertamina press release: From Solar Panels to Dual-Fuel Ships, Concrete Efforts by PIS to Reduce Pollution and Lower Emissions). PIS actively contributes to reducing air pollution and greenhouse gas emissions through a multi-pronged approach:
    • Operational efficiency: Recognizing that operational efficiency is the most cost-effective way to reduce emissions in the short term, PIS prioritizes practices like continuous hull cleaning, installation of energy-saving devices, and optimizing ship speeds.
    • Cleaner fuels and technologies: For the medium and long term, PIS is investing in the construction and acquisition of ships that utilize cleaner fuels, including liquefied petroleum gas (LPG), liquefied natural gas (LNG), green ammonia, green hydrogen, and biofuel blends (dual-fuel vessels). A prime example is the Pertamina Gas Amaryllis, one of the world's largest LPG-powered Very Large Gas Carriers (VLGC) and the first of its kind in Indonesia. Additionally, PIS incorporates biodiesel into the main engine power of 146 vessels within its fleet.
    • Renewable energy integration: PIS actively explores the use of renewable energy sources in its operations. This includes subsidiary companies like PT Pertamina Trans Kontinental (PTK) and PT Pertamina Energy Terminal (PET) successfully utilizing solar panels to reduce CO2 emissions. For instance, the installation of solar power plants on PTK's Transko Pari 01 ship fleet and shoreside connections at PTK Port Plaju have demonstrably reduced emissions and fuel consumption. Similarly, PET's implementation of solar panels at strategic terminals has yielded positive results.

Conclusion

Indonesia's maritime industry, a lifeblood of its economy and a strategic asset due to its geographical location, presents an exciting opportunity on the global stage. The nation aspires to become a global leader in sustainable shipping, shaping a cleaner and more responsible future for this vital sector. This ambition aligns perfectly with the growing international consensus on the need for a greener maritime industry.

While challenges like complex regulations and outdated infrastructure in remote areas persist, Indonesia's unwavering commitment to environmental responsibility shines brightly, offering valuable lessons for other maritime nations.

The diverse initiatives being implemented across the archipelago stand as testaments to this dedication. From the route optimization and cleaner fuel adoption championed by the Riau Islands' SSI to the visionary transition towards renewable energy sources pursued by the Bali Clean Energy Initiative, a spirit of innovation and collaboration permeates these efforts. North Sumatra's commitment to eco-friendly vessels demonstrates a focus on building a greener future from the ground up. Additionally, PT Pertamina International Shipping's multifaceted approach to decarbonization showcases the crucial role that private companies can play in driving change. These initiatives not only reduce Indonesia's environmental footprint but also contribute to cleaner air, healthier marine ecosystems, and a more robust maritime industry.

Furthermore, the Indonesian government last year was actively pursuing efforts to gather support from member countries of the International Maritime Organization (IMO) for Indonesia's re-election as a member of the IMO Council Category C for the 2024-2025 period. This re-election signifies its dedication to international collaboration on maritime regulations and environmental sustainability efforts. By actively participating in the IMO and sharing its experiences with successful sustainable practices, Indonesia can play a leading role in shaping global shipping policies that prioritize environmental well-being (refer to Indonesia re-elected as International Maritime Organization (IMO) Council member for 2024-2025). By actively participating in the IMO and sharing its experiences with sustainable practices, Indonesia can play a leading role in shaping a cleaner and more sustainable future for global shipping.

Interconnected efforts for global impact: Indonesia's commitment to sustainable shipping extends beyond its borders. Recent agreements with countries like the UK, a leader in maritime innovation, demonstrates a focus on knowledge sharing and collaborative research and development of cleaner technologies (refer to MoU reference). These partnerships not only benefit Indonesia but also contribute to a global shift towards a more sustainable maritime industry. By fostering international collaboration and sharing its experiences, Indonesia can serve as a model for other maritime nations, inspiring a ripple effect of positive change across the interconnected web of global shipping.

By fostering innovation, embracing collaboration, and prioritizing environmental responsibility, Indonesia is well on its way to achieving a sustainable future for its vital maritime industry.

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SOURCE: KPMG

Topic:
Environmental, Social and Governance
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