Accelerating the energy transition

Yara Marine’s Strategy Business Development Manager Thomas Gabestad talks to Lesley Bankes-Hughes about the company’s ambitions to expand into new green shipping technologies.

In 2019, scrubber manufacturers were riding high. Anticipated stronger prices for IMO 2020-compliant bunker fuel were the catalyst for a significant number of shipowners to invest in scrubbers – to a greater or less extent – across their respective fleets. Given the expected wide price spread between high and low sulphur bunker fuels after the IMO’s 0.50% global marine fuel regulation came into play on 1 January 2020, owners saw attractive an ROI timescale and the opportunity to continue purchasing high sulphur fuel oil (HSFO) at, as analysts then predicted, rock bottom prices.

The unforeseen arrival of COVID-19 summarily put paid to this scenario. Oil prices tumbled, bunker prices followed suit and a global contraction in world trade also saw shipping’s demand for marine fuel dissipate. Some vessel sectors, such as the cruise industry, which had invested heavily in scrubber technology saw their operations come to a standstill in a matter of days.

In July, Yara Marine Technologies’ COO, Ina Reksten, summed up the plight of scrubber manufacturers. ‘We never got the chance to see how things would have developed before the coronavirus hit.

‘Those that had invested in scrubber technology were happy, but COVID-19 has overshadowed everything since – it hit our core customers, so it has it us,’ she said.

She also highlighted that even before the COVID-19 crisis unfolded, Yara Marine had been considering product diversification.

‘We had adopted a new mission, to provide technologies to enable a greener maritime industry,’ she explained

‘The focus is on what we call “close to core” technologies, in the intersection between green and maritime.’

In August, Yara Marine offered the first indication of what its new direction might look like when it announced the launch of its corporate accelerator programme, Yara Marine X, which is open for applications between September and 11 October. The competition is seeking to attract ‘mature start-ups looking for partners and investors,’ said Yara Marine.

The winner of the competition will be announced in November and will then take part in a two-week bootcamp, followed by six months in a tailored accelerator programme.

At the announcement of Yara Marine X, Strategy Business Development Manager Thomas Gabestad explained that: ‘We will be recruiting young companies or professionals with a focus on sustainability and green solutions within vessel operations.

‘Candidates will need to be adjacent to what we do in order to enhance our corporate performance as a whole and help up us to build on our strong brand.’

Talking to about Yara Marine’s diversification ambitions, Gabestad was keen to emphasise that the company is not turning away from the scrubber market.

‘The scrubber market has been affected quite a lot by the COVID-19 situation, and also the spread between high and low sulphur fuel oil has been narrowing through the year which also makes the business cases not as attractive as it was, but we still think we have a fundamental belief in the scrubber market and that it will pick up,’ he said.

In terms of scrubber manufacture, Yara Marine has had an active 2020 fulfilling orders booked in 2019 but with a fall in new orders this year the outlook for 2021 is considerably more challenging. Shipowners have put decisions about scrubbers on hold and the newbuild market has also seen significant contraction this year.

While the impact of the coronavirus has taken its toll on Yara Marine’s core scrubber business – at least in the shorter term – Gabestad said that the company had already begun a conversation about expanding the scope of its activities before the pandemic took hold.

‘We had quite a big strategy session at the beginning of the year where we decided that we wanted to pursue wider portfolio thinking, so we changed our mission to providing the technologies for a greener maritime industry,’ he explained.

The thrust of the company’s strategy is to become more of a ‘one-stop shop’ for shipowners looking to maximise the energy efficiency of their vessels.

‘We will provide more technologies to reduce emissions and fuel consumption – basically, the shipowner will be able to select several options from one supplier when they want to make their vessels as energy efficient as possible,’ said Gabestad.

Yara’s first step in expanding its green product portfolio is the Yara Marine X accelerator competition. Working with Norwegian brand management and marketing company XY01, Yara Marine is contacting start-up companies and universities about the competition on a global scale.

The winner of the competition will receive a $10,000 prize and will take part in a six-month accelerator programme at the company’s HQ in Oslo. And, Gabestad explained, ‘we also want to have the possibility to invest in the company after the programme is completed.’

There are a number of products or technologies that could potentially align with Yara Marine’s existing skill-set and operational set-up, he said. These could include air lubrication and water treatment systems as well as shore connections.

Gabestad also noted that Yara Marine is receptive to discussions on potential collaboration with other companies – and this could include joint ventures and M&A deals.

Through its work on exhaust gas abatement systems, Yara has amassed a considerable amount of data and it is keen to realise the value and potential of that information.

‘We have a lot of emissions data from our scrubbers and if you can [apply] this information to different systems and solutions then you can look at things together in a bigger context – and preferably control them in combination instead of all the systems being standalone,’ said Gabestad.

He also highlighted the growing importance of environmental reporting by organisations and businesses – this is increasingly becoming part of part of their ESG policies and is also something that potential investors are including in their assessments of prospective corporate candidates for financing.

Yara Marine’s parent company is the fertiliser manufacturer, Yara International. The firm is already exploring the production of green ammonia – one of the alternative fuels which is expected to play a key role shipping’s energy transition – and it is also working on the Yara Birkeland project, which will be the world’s first autonomous and electric container ship.

While there has not been any significant ‘overlap’ to date between Yara International’s position as a fertiliser producer and ship operator and Yara Marine’s role as a technology provider, Gabestad indicated that there may be a closer working relationship in the future.

‘There are discussions around ammonia, which is something closely related to Yara International, and this is something that we will look at together,’ he said.

If the Yara Marine X accelerator programme is a success this year, then the plan will be for it to become an annual event and Gabestad clearly thinks that shipping could learn from other industries sectors when looking for new ‘green’ solutions and technologies.

‘People working with land-based technologies which can be applied to the maritime industry – I think there are certainly synergies, and maybe we will see this in the start-up competition as well,’ he said.

‘I think it’s a matter of convincing the large maritime industry what it is that can benefit them and  that the solution is long-lasting – that is important – but I think that there are opportunities for the maritime sector to see what other industries are doing as well.’

While shipping will be increasingly ambitious in meeting decarbonisation targets and adopting new, greener technologies, this technological transition will come at a cost, so funding provision – at least in any start-up phase –  is key.

Gabestad is firmly of the opinion that if a solution is feasible and marketable it will find investment.

‘There is a global focus on reducing emissions – you can see that the banks are providing green loans and there is a lot of government and EU funding that you can apply for [in terms of] R&D projects that are related to emissions reduction, so I think it’s not necessarily the lack of capital that will hold back development.

‘If you have a good case you will always find something – you will need to prove that the product or service you provide is a good solution and will take off.’

Lesley Bankes-Hughes

Lesley Bankes-Hughes