MISC Annual Report 2019

Water Consumption Freshwater consumption by our vessels are produced on-board by each vessel’s freshwater generator, hence, depletion of freshwater resources is not considered material for our sea operations. Nevertheless, we recognise that water usage on our vessels for domestic and the running of machineries are tied to energy use as energy consumption because a significant amount of energy is required to generate freshwater from these generators. In 2019, our freshwater withdrawal from non-shipping operations has reduced by 21% mainly due to a reduction from our shipyard operations. As part of the yard’s green campaign, water saving fittings were installed on taps resulting in a reduction in consumption from a more controlled and reduced water flow. Meanwhile, total freshwater consumption for shipping operations has increased by about 12% as a result of increase in vessels’ activity. Biodiversity All our vessels are equipped with ballast water management plans as we realise the importance of reducing the risk of spreading non-native aquatic species into the marine environment from the ballast water of the vessels. Since 2016, all newbuilds are equipped with Ballast Water Treatment Systems (BWTS) and in 2019, an additional six vessels were retrofitted with them. We also use an environmentally friendly detergent on our vessels to minimise the release of harmful substances into the ocean. These green certified detergents are 100% non-toxic and biodegradable, contain only plant-based enzymes and are free form phosphate, sulphates and petrochemicals. We developed a framework for our Biodiversity Conservation Flagship Programme which is set to launch in early 2020. The programme is aimed at improving ocean health through supporting conservation initiatives of coral reefs and actions to prevent and reduce plastic litter in our oceans. Two focus areas i.e. reef management and marine debris/plastic waste management will form the core of the programme. The implementation of this programme which is in partnership with a non-profit organisation largely involves the participation of MISC employees as well as collaboration with local communities, academia and local authorities. Total Freshwater (m 3 ) 1,072,501 2016 2017 2018 2019 385,534 922,583 308,139 935,724 287,124 740,542 322,175 Freshwater Withdrawal (Non-shipping) Freshwater Consumption (Shipping) ISO 14001 Environmental Management System Environmental Achievement Awards • No reportable spills • No U.S. Coast Guard and port state citations for violations of MARPOL • No violations of state/local pollution regulation Recognises vessels performance for reducing SO X and CO 2 emissions ISO 50001 Energy Management System Environmental Ship Index (ESI) Recognises performance of vessels in terms of NO X , SO X and CO 2 emissions (6 vessels) Green Passport Certification on inventory of hazardous materials (11 vessels) Green Ship Programme Maritime Port Authority, Singapore Going GREEN as We Sail Across the Blue Utilising solar power to reduce our carbon footprint On 10 October 2019, MISC’s subsidiary, Malaysia Marine and Heavy Engineering Holdings Berhad (MHB), together with PETRONAS, signed a Memorandum of Understanding for the installation of solar rooftop solutions at MHB’s ship installation yard in Pasir Gudang, Johor. Work on installation will begin in 2020 aimed at increasing usage of renewable energy and contributing to a lower carbon economy by conserving the use of natural resources. It is estimated that the installation of the solar panels would reduce CO 2 e emissions by about 7,000 tonnes annually and targets assured generation of 200 million kWh of solar power in 25 years. Embarking on our journey towards zero carbon In September 2019, MISC became a member of the ‘Getting to Zero Coalition’, an association of global industry leaders that have committed to develop deep-sea zero emission vessels by 2030. The move is a first step towards realising the IMO ambitions for GHG reduction. Members of the coalition are committed to embarking on research and development of commercially viable deep-sea zero emission vessels powered by zero emission fuels into operation by 2030. In 2019, MISC embarked on a joint development project with Samsung Heavy Industries, Lloyd's Register and MAN Energy Solutions to build an ammonia-fuelled tanker in line with the aspiration of a decarbonised future. The alliance was motivated by united beliefs that collaboration amongst industry leaders are imperative to meet the IMO’s 2050 Greenhouse Gas emission target, which requires commercially viable deep-sea zero emission vessels to be operational by 2030. Ammonia represents one of the routes to achieving zero-carbon emitting vessels. MISC fleet renewal with adoption of green vessels Through our subsidiary, AET, we equipped two Aframax tankers, Eagle Brasilia and Eagle Bintulu , with LNG dual- fuel systems. These vessels were delivered in early 2019 and are amongst the first LNG dual-fuelled vessels in the industry. They are also equipped with optimised hull design and modern, energy efficient engines and machinery. In the same year, AET named its newest vessels, two of the world’s first LNG dual-fuel DPSTs. The vessels, hailed as the cleanest DPSTs ever built, will emit 40-48% less carbon than equivalent vessels built in 2008, meeting the IMO’s target of reducing CO 2 emissions by 40% by 2030 and halving CO 2 emissions by 2050. These LNG dual-fuel DPSTs also emit 85% less SOx, 98% less NOx, 98% less particulate matter and 93% less black carbon particulates than DPSTs burning conventional fuel. Powered using LNG as the primary fuel, the LNG dual-fuel DPSTs will also be able to capture 100% of the harmful Volatile Organic Compounds (VOC) which escape into the air from crude oil cargoes during loading and voyage for reuse as a supplementary fuel. Utilising a more efficient system for dynamic positioning (the activity of ensuring the vessel remains stationary above a specified area of seabed while loading oil at sea), combined with the LNG dual- fuelling and VOC Recovery Systems, these vessels will save up to an estimated 3,000 tonnes of fuel per year compared with conventional DPSTs of the same size. The IMO – which is the United Nations specialised agency responsible for the safety, security and environmental impact of the maritime industry – has set a course for the industry. It aims to reduce CO 2 emissions by at least 40% per cargo tonne-mile by 2030 (pursuing a 70% reduction by 2050) and a 50% reduction in total GHG emissions by 2050 (against 2008 levels). MISC has rolled out several initiatives to heed the call for climate change action. Management Discussion & Analysis Environmental Certifications and Awards (All petroleum vessels) (59 vessels) Operating Safely and Sustainably 147 146 OUR BUSINESS PERFORMANCE MISC BERHAD PEOPLE. PASSION. POSSIBILITIES ANNUAL REPORT 2019