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Speech for WA Launch of LNG Marine Fuel Institute

Richard Sandover, Chairman of LNG MFI

Jackson McDonald

Good evening.

“I respectfully acknowledge the traditional owners of the land on which we are meeting today, the Whadjuk people of the Noongar Nation, and pay my respects to their Elders both past and present.”

Welcome distinguished guests, ladies and gentlemen. My name is Richard Sandover, Chairman of Partners of law firm Jackson McDonald. I have the privilege of being the Chairman of the Australian LNG Marine Fuel Institute. I am honoured to be addressing you this evening for the West Australian launch of the LNG Marine Fuel Institute.

LNG MFI views our mission as bipartisan requiring sound policy to support long term investment decisions, so it is gratifying that we have both Government and Opposition members of the Federal and State Parliament here this evening. Thank you all for your interest in this matter. We particularly acknowledge:

  • Minister Peter Tinley AM MLA;
  • Mr Tatsuo Hirayama, Consul-General, Consulate General of Japan in Perth;
  • The Hon Stephen Smith (former Minister);
  • The Hon David Johnston (former Minister);
  • The Hon Albert Jacob (former Minister);
  • Robin McClellan (former Consul-General to Western Australia from the United States)

On behalf of the Board of LNG Marine Fuel Institute and our members, I extend our sincere thanks to the Honourable Peter Tinley AM MLA, Minister for Housing; Veterans Issues and Youth who is representing the Government of Western Australia at this event.

In mid-2016, a group of people from the Australian marine, LNG, academic and general commercial sectors came together. We shared a conviction that bunkering heavy fuel oil which traditionally powers the global maritime shipping trade had to give way to a cleaner energy source. Maritime shipping powered by heavy fuel oil is a major polluter emitting sulphur dioxide, nitrous oxide and other pollutants. Anyone who flew into Los Angeles in the 80’s will recall the heavy smog that used to hang over that city. Likewise, anyone who has travelled to Beijing or other cities in China this millennium will have experienced the serious pollution existing there.

Today LNG MFI and the London-based Society for Gas as a Marine Fuel have entered into an alliance. SGMF is a London-based NGO established in 2013 to promote safety and industry best practice in the use of gas as a marine fuel. SGMF have been solving issues and producing outputs such as guidelines and checklists for the LNG bunkering industry and LNG fuel ships. In this respect, we welcome Mark Bell, the CEO of SGMF who is here today and look forward to our respective organisations collaborating further in the future.

A major reason why heavy fuel oil has persisted as the primary energy source for maritime shipping is that historically a steaming ship over the horizon is out of sight and out of mind. This is no longer the case. To bring the issue closer to home, about 12% of Perth’s pollution is caused by maritime shipping coming and going through Gage Roads off the coast of metropolitan Perth.

Led by Western Australia, there is an opportunity for Australia to:

  • Secure global health and climate emissions benefits;
  • Position Australia at the forefront of the development of LNG as a marine and transport fuel;
  • Establish an LNG bunkering industry in Australia with the economic and employment benefits that would flow; and
  • In an increasingly geo-politically unstable region, grow our nation’s security of energy supply. Most in this room are probably aware that Australian imports in excess of 90% of our transport fuels. Australia holds less than 30 days reserves of transport fuel in the event of a crisis. Best practice is around 4 to 6 months to ensure security of supply for a sovereign nation.

Out of this was borne the idea of establishing the LNG Marine Fuel Institute, a fact based, independent, not for profit organisation.

In October 2016, the International Maritime Organization, the UN agency charged with establishing and regulating maritime shipping emission standards globally, published new emission standards.

While the emission standards are agnostic as to the nature of the marine fuel, by 2020, the international maritime industry must significantly reduce their sulphur dioxide , nitrous oxide and particulates emissions.. For example, by 2020, SO2 emissions from marine fuel must be reduced from 3.5% to 0.5%.

A number of OECD countries including China, USA, Canada, the Baltic States and the European Union have started the process of adjusting to this new environment. These countries have introduced even more stringent standards relating to emissions from ships sailing through their territorial waters. For example, they have mandated lower standards for SO2 from the proposed IMO level of 0.5% to 0.1%.

By comparison, LNG as a marine fuel emits negligible sulphur dioxide, nitrous oxide and particulates emissions.

By every measure, LNG is a significantly cleaner marine fuel by comparison to Heavy Fuel Oil.

On the back of this global focus, the maritime industry is in a rapid transition to gas for marine power generation and propulsion. The desire for cleaner fuels is creating a potential worldwide market for LNG as a transition transport fuel to renewables.

As a trading nation and soon to be the single biggest exporter of LNG, Australia is well placed to embrace early adoption of LNG as a marine transport fuel.

The vision of LNG MFI is for Australia to play a leading role in the supply of LNG as a global marine fuel and in so doing benefit Australia.

LNG MFI supports the establishment of a 'green corridor' for the bulk ore and LNG export trade between:

  • China and Australia;
  • Japan and Australia;
  • Korea and Australia; and
  • other south east Asian countries.

With collaboration between industry, government and the community, this can lead to the establishment of an LNG bunkering industry in Australia, jobs for Australians and enhanced energy security for Australia.

The wisdom of the bipartisan policy of the Western Australian Government in reserving 15% of our LNG for domestic use is becoming apparent. If Western Australia on behalf of our nation can lead the way to creating an LNG bunkering industry leveraging the State’s world class exports of bulk iron ore and LNG from the Pilbara region, this will place Australia in the vanguard of this new industry.

This reliance on imported fuels is an unsustainable model – LNG as a marine fuel is the first step towards helping Australia achieve energy independence and is part of our transition to a cleaner energy mix.

Bunkering LNG produced in Australia strengthens our national energy supplies, impacts positively on our balance of payments, will lead to innovation around a new industry and place Australia at the centre of this change.

The move away from heavy fuel oil is inevitable. There is competition in our region regarding which countries will take a leading role. For Western Australia to leverage its existing supply, infrastructure and energy advantages, it will be necessary for both State and Federal Governments to adopt a bipartisan policy in this area. If Western Australia and Australia do not grasp this opportunity, other nations such as Singapore certainly will.

LNG MFI envisions a future for LNG fuels, not only in the marine industry … but also our road, rail and mining industries being fuelled by our own gas. This supports the need for Australia to gain increased energy independence. Our CEO and director, Captain Walter Purio describes this as our 'noble cause' and he is right.

LNG as a marine fuel is the first step towards helping Australia achieve energy independence and is part of our transition to a cleaner energy mix.

LNG MFI is an independent, not-for-profit organisation. We promote best practice use of LNG as a marine transport fuel through industry collaboration and thought leadership across the supply chain:

  • by driving innovation through research and development; and
  • by providing advocacy, information and expertise to industry, government and our community.

We believe LNG MFI is an opportunity, applying an evidence based model, to make a contribution to securing Australia’s energy independence, establishing new industry and contributing to a cleaner global environment.

In this respect the future is today.

We look forward to your support. We encourage you to be involved.

I would now like to welcome The Honourable Peter Tinley AM MLA to say a few words and officially launch the LNG Marine Fuel Institute.

End.

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c/- Jackson McDonald,
Level 17, 225 St Georges Tce Perth, Western Australia 6000