Commodity Giants Get on Board with Branson’s Carbon War Room, Efficient Ships Only Please

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October 2, 2012

Image courtesy Carbon War Room

(Bloomberg) — Cargill Inc., which says it hires more commodity carriers than any company worldwide, and two other industrial shippers, will stop using the most fuel- inefficient vessels to reduce their carbon emissions.

Cargill, which transports 200 million metric tons of minerals, grains and energy commodities each year, won’t use ships ranked in the lowest two of seven categories as rated by the Carbon War Room, the Richard Branson-led nonprofit said by e-mail today. Unipec U.K. Co., a unit of China’s biggest oil trader, and Huntsman Corp., a chemical shipper and manufacturer, also won’t charter ships with the two lowest classifications, according to the statement.

Cargill spends $2 billion a year on fuel for its vessels and operates a fleet of about 400 ships at any one time, according to Jonathan Stoneley, environment and compliance manager of Cargill Ocean Transportation. Fuel prices at Singapore averaged $679.32 a ton so far in 2012, which would set an annual record, data compiled by Bloomberg show.

“It makes commercial sense as in the current market the first thing we look at when we charter a ship is its performance and fuel consumption,” Stoneley said by phone yesterday. “If we don’t act ourselves we’re going to have regulation put on top of us and it’s better if we can drive regulation the way we want it.”

The Carbon War Room and Rightship, a ship-vetting provider in which Cargill holds a 33 percent stake, categorized 60,000 vessels from A to G according to their energy efficiency. Until now, fewer than 1 percent of the ships Cargill booked were rated G and about four or five vessels had an F classification, Stoneley said.

350 Million Tons

Cargill, Unipec and Huntsman haul a combined 350 million tons of goods by sea each year and are the first shippers to commit to cutting their fleets’ carbon emissions, Peter Boyd, chief operating officer of the nonprofit said by e-mail.

All Cargill traders must now seek his permission if they want to hire the two least-efficient ship types, Stoneley said. Some lower-ranked ships with large engines achieved lower emissions than more efficient ones with smaller engines when sailed at slower-than-average speeds, which may “very rarely” permit their use, he said.

International shipping accounted for 2.7 percent of global carbon dioxide emissions, according to a United Nations study. The industry needs to voluntarily cut its greenhouse gas gases, Stoneley said.

Rightship is used by 150 marine companies worldwide, including charterers, banks, ports and insurers.

– Michelle Wiese Bockmann, Copyright 2012 Bloomberg
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