Cargill goes green at sea

  • Article by: JIM SPENCER , Star Tribune
  • Updated: October 14, 2012 - 7:23 PM

Cargill has started rating ocean-going ships for fuel efficiency, and it has pledged to avoid vessels that get the lowest scores.

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These days, when Cargill Inc. charters a ship to move agricultural products around the world, the company doesn't just ask about the rent, it checks the maritime equivalent of miles per gallon and emissions.

If the ship's a fuel-guzzling polluter, Cargill looks for another vessel.

The giant Minnesota agribusiness has chosen to take the world on a unique new voyage: It hopes to discover a way to make money by going green on the deep blue sea.

The idea that one of the world's biggest shippers can help the environment without hurting itself economically may seem contradictory. It isn't, said Peter Boyd, chief operating officer of the Carbon War Room, an international nonprofit group that helped talk Cargill into leading a corporate revolution against climate change.

"These guys are looking far ahead," Boyd said in an interview from London. The movement "needs an innovator and they don't mind being first."

Cargill will determine which vessels to charter using a seven-tier rating system. The system ranks individual ships in each class of the world's commercial fleet. Ratings go from most to least energy efficient. Cargill and two other pioneers -- Huntsman Corp. and UNIPEC UK -- have pledged not to use vessels in the two least efficient categories.

"There are some [energy efficient] technologies out there," said Tom Beney, president of Cargill Ocean Transport USA, a Cargill subsidiary. "We want to put a stake in the ground and say let's try some of these things. There's a lot of talk and not a lot of action."

So Cargill acted. The company believes it makes economic sense to ship only on vessels that consume less fuel and produce less carbon dioxide that contributes to climate change, Beney said.

But, he added in an interview, Cargill and its customers are becoming more focused on "a sort of greening of the supply chain." That means Cargill will say no to fuel-guzzling, polluting vessels, even if they are cheaper to operate overall.

"Our customers will say, 'We want to do business with Cargill because they're taking a responsible attitude toward this,'" Beney said. "There are others who couldn't care less."

The corporate commitment to more energy efficiency and less air pollution was the culmination of discussions with Carbon War Room, which dedicates itself to finding "opportunities to make money and reduce carbon at the same time." Eventually, Cargill hopes to experiment with huge, high-flying "sky sails" that can be attached to giant ships to augment fossil fuels with wind power.

"It's a bit like kite surfing," Beney said. "We're far away from that."

For now, the company will rely on an energy efficiency rating system built by RightShip, a company in which Cargill bought a one-third share in 2006. RightShip uses a complex mathematical formula to estimate an individual ship's carbon dioxide emissions per ton and per nautical mile.

"We're comparing ship types and ship groupings with each other," Beney explained. "Now we've got a basis on which to decide whether a ship is an efficient ship or not an efficient ship."

Engine adjustments

The easiest way to save on fuel and cut pollution is to cruise at reduced speeds, something called "ultra-slow steaming." The practice can save $40,000 to $50,000 in fuel costs on a 30-day voyage, depending on the size of the ship, Beney said. But it requires adjustments to many existing ship engines.

"You really have to change the technology because you could potentially do some damage to the engine if you run it like that consistently," Beney explained.

At the same time, Boyd believes that if everyone in the shipping industry follows Cargill's lead, savings in fuel costs could be $70 billion a year while simultaneously reducing carbon dioxide emissions by 300 million tons. Boyd also thinks Cargill's position as a world shipping leader will bring others on board.

"We're a little bit of an 800-pound gorilla in the dry bulk market," Beney admitted. "But we're not the only people out there." He said Cargill Ocean Transportation is involved in the Sustainable Shipping Initiative, a group of 15 large organizations that are working to create a sustainable future for shipping.

The effort did not get off to a great start with some ship owners. In a statement to the Star Tribune, the shipping association BIMCO warned against "making commercial decisions on the basis of flawed indications of specific ships' operational energy efficiency." Owners generally worry that a boycott of certain vessels will force them to make expensive adaptations to engines and hulls without realizing any savings for themselves.

The Carbon War Room's Boyd conceded that right now the bulk of savings accrue to shippers, not ship owners. The challenge will be to find a carrot to go with the stick, he said. "That might mean charterers share some of their savings with owners."

For Cargill, it could even mean buying stakes in some ships, Beney said.

"We believe we'll be in a high-priced fuel environment for the foreseeable future," he noted. "The industry needs to tackle that in a much more rigorous way than it's doing today."

Jim Spencer • 202-383-6123

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