MISC Integrated Annual Report 2020

2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Moving Forward Our journey ahead is focused on achieving the IMO 2050 aspiration. Going into 2021, we will be reviewing our organisational boundary, baseline year and setting new targets that are aligned with IMO 2030 and IMO 2050 aspirations. In 2020 we carried out an analysis to calculate our fleet CO 2 emission projections up to 2030. The analysis also served to benchmark our current fleet emissions and emission projections with IMO’s decarbonisation trajectory which represents IMO’s ambition to reduce total GHG emissions by 50% in 2050 compared to 2008. Several scenarios were assessed which considered MISC’s prospective fleet expansion plan, possible introduction of IMO’s regulation mandating operational GHG reduction, and vessel’s existing engine upgraded to higher efficiency engines. Hypothetical scenarios on vessels’ conversions were also included in the analysis to assess the potential CO 2 reduction possible with CAPEX- intensive solutions such as re-engine to convert steam vessels to diesel engine vessels. In 2020, we reduced our GHG emissions from all our operations by an overall 12%, compared to 2016, although transport work increased by 1% within the same period. Additionally, all three vessel segments achieved the CO 2 intensity targets of 9.82, 3.33 and 9.59 measured in unit of gCO 2 /ton-nm, for LNG, petroleum and product fleet, respectively. The reduction was contributed by the addition of newbuild vessels with improved carbon efficiency as well as the overall energy efficiency improvement of the existing fleet through technical and operational measures. The following graphs present our five-year trend lines for our various fleets’ CO 2 Intensity Performance. The performance is compared with our MISC2020 carbon emission targets, against a baseline year of 2016. Generally, most of our LNG vessel classes showed a CO 2 intensity reduction in 2020 from 2016 with an average fleet reduction of 18%. LNG newbuilds built after 2016 have been, on average, 17% more carbon efficient than the older LNG fleet average, as a result of greener technologies that have been incorporated. The Petroleum fleet has scored a 10% reduction in CO 2 intensity against a 2016 baseline. New vessels built since 2016 have been, on average, more carbon efficient than older vessels as follows: • New Aframax vessels – 24% more carbon efficient • New VLCC vessels – 10% more carbon efficient • New DPST vessels – 27% more carbon efficient • New Suezmax vessels – 29% more carbon efficient Note : Third party assurance on our carbon emissions Each of our vessel’s fuel consumption and relevant activity data have been verified by a third party i.e. DNVGL confirming the data were collected and reported in accordance with the methodology and processes set out in the ship’s Ship Energy Efficiency Management Plan (SEEMP) as required by Regulation 22A of Annex VI of MARPOL Convention. The chart above shows our fleet’s average CO 2 emission projections to 2030, comprising of LNG and petroleum vessels (measured in gCO 2 /ton-nm), providing two key scenarios of lowest and highest reduction. The ‘Business as usual’ line represents the smallest CO 2 reduction scenario, while the most effective reduction is represented by the line ‘Hypothetical scenario of fleet conversions’. A summary of the analysis of the projection chart is as follows: • Between 2020 to 2030, we are narrowing the gap between our average fleet CO 2 intensity and IMO’s 2050 trajectory. • Even with the hypothetical scenario of fleet conversion, our average fleet emission in 2030 will still be above IMO’s 2050 trajectory, at approximately 16% above the trajectory. Additionally, our analysis also shows that several of our vessels existing in the fleet currently have CO 2 intensity below the IMO’s 2050 trajectory. These include our two dual-fuel diesel electric (DFDE) propulsion system LNG carriers, our VLCCs delivered after year 2013 and our Suezmax vessels delivered in 2018. Our Future Plan Based on our projection analysis, while we are narrowing the gap with the IMO 2030 aspiration, we still need to do more to achieve the IMO 2050 target by making a progressive radical shift to move to zero-carbon emission vessels by 2030. In light of this, MISC has embarked on a Joint Development Project (JDP) by collaborating with other key maritime players to develop an ammonia-fuelled vessel as a zero-carbon emitting vessel in order to achieve the shipping industry’s goal of a decarbonised future by 2050. The JDP is a joint effort between MISC, Samsung Heavy Industries (SHI), Lloyd’s Register (LR), MAN Energy Solutions, Yara International ASA and the Maritime and Port Authority of Singapore (MPA). Ammonia is just one of the various decarbonisation pathways that the shipping industry is exploring towards the industry’s decarbonisation by 2050. More information on the JDP can be found in the Anchoring Sustainability @ MISC section page 120. In 2020, methane emissions accounts for 2% of our total GHG emissions. However, we are cognisant of the issue of methane slip emitted from our LNG-fueled engines. We will continue to monitor our methane emissions and consider technologies which reduces methane levels in our future investment. MISC FLEET AVERAGE (LNG & PETROLEUM) CO 2 EMISSION PROJECTIONS (gCO 2 / ton-nm) MISC FLEET CARBON CO 2 INTENSITY PERFORMANCE Business as usual Hypothetical scenario of fleet conversions IMO2050 decarbonisation trajectory Carbon Emission Performance in 2020 — LNG Fleet 11.64 Puteri Aman Mid Size Puteri Satu 8.89 Seri A LNG Fleet Average 25.28 11.03 9.22 Seri B Seri C Vessel built after 2016 (average) Vessel built before 2016 (average) Duel Fuel Diesel Electric 9.72 7.64 22.49 9.85 7.97 gCO 2 / t-nm 2020 Baseline (2016) 13.28 5.61 10.47 10.45 7.97 7.79 5.88 8.73 8.54 7.66 7.66 Carbon Emission Performance in 2020 — Petroleum Fleet P-Max T-Class DPST K Class VLCC 1 B-Class VLCC 2 DPST 83.7k GT Suez-1 Vessel built after 2016 (average) MCV Kelana LR-2 Paramount Kasturi Series B-Class 2 VLCC 3 Vessel built before 2016 (average) Suez-2 Petroleum Fleet Average gCO 2 / t-nm 2020 Baseline (2016) VLCC Suezmax Aframax 5.83 4.78 6.48 4.54 2.87 4.71 2.39 3.66 6.23 6.11 5.24 2.63 3.66 3.66 6.07 4.32 5.97 4.23 2.75 3.33 2.57 4.34 3.72 2.96 5.25 5.51 3.72 5.58 2.76 3.91 2.41 3.40 2.63 3.30 OPERATING SAFELY AND SUSTAINABLY ///// Sustainability / Financial Review / Business Review / Leadership / Governance /// MISC Berhad / Integrated Annual Report 2020 7 216 MISC Berhad / Integrated Annual Report 2020 7 217 /// Governance / Leadership / Business Review / Financial Review / Sustainability ///// Section Section