Interview with Ms Yngvil Asheim

Dr Sanjay: Good day everyone. In this new episode of the SMI Horizon, we are delighted to have Ms Yngvil Asheim, Managing Director of BW LNG. Yngvil joined BW on 1 November 2010 as Managing Director for BW Fleet Management and became Managing Director for BW Shipping in October 2013. She subsequently assumed the role of Managing Director for BW LNG in November 2015. Yngvil has held several board positions and is currently a Director of Gard P&I (Bermuda) Ltd. She is also a member of the 2nd SMI International Advisory Panel.

Hi Yngvil, nice to see you again. How are you?

Ms Asheim: Hi, nice to see you as well. I am very well, thank you. 

Dr Sanjay: Trust you are keeping safe?

Ms Asheim: Absolutely. In Norway, where I’m based, has had quite a serious lockdown for a while, but it seems like things are moving in the right direction now and vaccination is coming on. So, I’m hopeful it’s light in the tunnel. 

Dr Sanjay: Excellent news. Thank you for joining us today, as we take a deep dive into the topic ‘Retrofits versus New Built: Pathways to Decarbonisation’. I guess the word pathways identifies the fact that there are many options on the way we want to move forward in our decarbonisation journey. So, let’s jump straight into it. 

The IMO is targeting 50% reduction in GHG emissions and 70% reduction in carbon intensity by 2050, compared to the 2008 levels. How is BW preparing its fleet to meet IMO’s 2050 goals?

Ms Asheim: I like to start actually with mentioning the mission of the BW Group, which is about transporting energy for today, but at the same time finding solutions for tomorrow. I think that is actually very much reflected in how we work towards the 2050 goals.

I think it is fair to divide it into three buckets. So, the first bucket is about optimising what we have, while using energy efficiency actions. Here, I’d like to actually start talking about something which I think is a bit under communicated, at least for the last couple of years, around how important it is to actually understand what we’re doing. To have the right competence and awareness, both on board the vessels, but also ashore in the support organisation. We work quite a lot on making sure that we have people who really understand the equipment, how the equipment works, and how the equipment works together, and how the shore organisations support those on board to make the right decisions.

In that bucket, I will also put data. How can we use data to make better decisions and optimise things? One of the things we have done in BW Group is the investment in Alpha Ori, who is all about developing digital solutions for shipping, and using that to support better decision making. We have also then now moved on to a collaboration together with Alpha Ori and Kongsberg Digital, and we are going to build the world’s first comprehensive maritime digital twin on one of our ships, to see how that can actually help us make better decision and optimise things in a better way. 

My last example is a joint venture with Miros. Miros has developed a wave radar that gives us much more accurate weather data. It is all about how we can optimise the voyages in a better way. So, that is the first bucket. 

Second bucket is also about optimising what we have, but then we are talking about retrofitting. The most important example in BW Group is what we are doing on our energy fleet. We have decided to retrofit 15 of our VLGCs to LPG as fuel. By that, we are reducing the CO₂ emission immediately with 25%, we take down the SO_x with 80% and NO_x with 20%. In addition, it’s a number of other benefits to that retrofitting. We have easy storage; we have faster refuelling; we have less pollution risk; and we have the fuel flexibility. Having a dual fuel engine is actually one of the keys, I think, for at least the next 10 years, to be able to accommodate new alternative fuels as they come along.

We come to the third bucket where is getting most attention maybe, that is what we do on new technology. One example is our investment in Corvus, who is the biggest provider of batteries for the maritime industry. That is a very concrete example of one technology, which we think is going to be important. We are then talking about the roadmaps, how are we going to get from where we are today to the targets in 2015. To create that roadmap, actually a bit the same way as the IEA report that came out yesterday or a couple of days ago, around the pathway towards the total goal of the climate change towards 2050. It’s about mapping out the roadmap. We are part of CLIMMS, driven by SINTEF Ocean here in Norway, which is looking to create that roadmap for shipping.

I would also like to mention the decarbonisation (centre) in Singapore that was just launched a few days ago, where we together with like-minded owners, the government of Singapore, and a number of other stakeholders, are creating a centre where they are not only going to pilot technology, but also look at financial solutions, business models, etc. So, that is the third bucket of what we are working at.

I think going back to the BW Group, we are on a journey. From 2019 to 2020, we managed to reduce our CO₂ emissions by 15%. We feel that we are on track towards the goals, but it is a lot of hard work in front of us. We think the IMO targets are both ambitious, but they are also very necessary, and we are determined to do our part of it.

Dr Sanjay: Thank you Yngvil. It sounds like a very holistic approach to very complex problem. I guess, while supportive of the IMO 2050 decarbonisation goals. the maritime industry has raised concerns on the lack of direction in fuel type, such as the supply chain of alternative fuels or new sources of energy. How should the government administration and stakeholders help the industry prepare for this transformation, to encourage an early shift if anything?

Ms Asheim: I think the keyword you mentioned yourself is the holistic approach. Like climate change needs global and holistic solutions, so does shipping. I think the government and stakeholders need to work together, that is absolutely necessary. We see that a lot of the technologies we need is here, of course some of them are in a very early stage, so there are a lot of developments to do. It is a big question mark not only about availability and price, but also for instance safety, which is so key to our industry.

I also mentioned the importance of sustainable production of these alternative fuels. So, it is easy to talk about hydrogen, ammonia, but how do we actually produce the volume we need in a sustainable way. It doesn’t really work to go ahead with brown hydrogen produced from coal without carbon capture, and say okay then we are good. It is a lot of things that needs to come together before we are ready to really take these alternative fuels into use. Only when we have those global supply chains available, that is when the industry will be able to utilise them. 

I think ports have a very big role to play here, and I will be encouraged to see how they build the necessary infrastructure for LNG bunkers. I am also encouraged to see how they are now developing that further into alternative fuels. I think Singapore and also Rotterdam for instance, have been in the forefront of developing this.

Governments, yes, big role in supporting research and development, supporting their ports in the job they need to do. I think also creating incentives is going to be key here. A few years ago, Norway created the NO_x fund, where they charge the fee on vessels trading in Norwegian waters on their NO_x emissions, and they plowed that fund back into research development, into building more efficient vessels for the future, and it really worked. I think that is also what we hope to see with a possible CO₂ levy in the future, that we will have the necessary funds that can be plowed back into the industry to support this heavy lifting on technology development. Not only the technology development, but building the necessary infrastructure.

Finally, I think I will also like to mention the financers, I think they have been very good at managing the risk traditionally, and now also including industry. But I have still to see the real carrot on the finance side, and I really hope they step up to the plate here to support owners that really want to take a courageous step in the right direction.

IMO is under an immense pressure. I would like to also say that it is so important that all of the stakeholders to this industry support their efforts to create these necessary, global, predictable and goal-based regulations that we will need.

Dr Sanjay: Thanks for that Yngvil. I think your point on the colour of the molecule, and its lifecycle impact on a global scale, not just at the point of views, is well taken. I think it is something we need to be extremely cognizant about when we start adopting what we call future fuels for the shipping industry. Another concern for the maritime industry is the usability of existing fleets in the market. I think you alluded to that in your three-pronged approach. How can we prolong the lifecycle of existing vessels while achieving the decarbonisation goals? Maybe we could deep dive a bit more on that?

Ms Asheim: It is a very important question. Again, I think that discussion sometimes drowns a bit in the discussion on new technology. As I mentioned earlier, our two first buckets, which is about optimising what we have, and retrofitting existing vessels, I really think that requires a lot of attention. For the next 10 years, we really need to put a lot of effort into that. I may like to also specifically emphasise the use of dual fuel engines, or that can with smaller modifications, burn a range of fuels, and create that necessary flexibility that we need. 

I think I like to also mention another initiative that we are supporting in BW Group that emphasises the charter’s role. Charters have an extreme big impact on how we run our vessels and how we then optimise the voyage. The untapped potential here I think is huge. So, we are taking the initiative to create what we call the Copenhagen Commercial Platform, it is approved for dry bulk vessels. The idea here is to create a full transparency between charters and owners and bring together like-minded owners and charters to drive down their environmental footprint. I think to also use commercial tools, not only what we can do on board the vessel, is a very important part towards these goals.

The last thing I like to mention under this question is also carbon capture. We are following the carbon capture discussion very closely, and of course so far, it is in a very early stage and it is all about the technology of capturing the cargo carbon for our shore-based industry. But we think that potentially could also be used on board the vessel. Of course, you have additional challenges. One thing is the capturing, but how do you store it and how do you then discharge it into permanent storage. So yes, it is not given on how that is going to be stored. But in an environment where we don’t really have one solution, a silver bullet, we think it is important to turn all stones, and be very open minded about what can be done.

Dr Sanjay: Thank you for that. I just want to dig into a bit more on the retrofitting story. Now, the presumption is retrofitting of existing ships would provide possibilities of saving fuel and reducing their environmental footprint, on a lifecycle basis. In your opinion, can retrofits stay competitive against newer eco designs? What are the benefits of retrofit versus new built? Do the numbers actually stack up for retrofits?

Ms Asheim: We think it does. I think lifecycle is the key word here, so I will come back to that. Each case will be different. So, you need to really do a case study and have a deep dive into each different business, and each different case. But let me talk about the concrete example of converting to LPG fuel on our VLGCs.

Before we did that decision, we took a step back and also commissioned an independent study looking into what is the mission of building a VLGC versus retrofitting, and the numbers came back, and it was kind of an eye-opening answer. Building a new VLGC will cost around 70,000 tons of CO₂, while the retrofit costs 2000 tons of CO₂. So immediately, you get a 97% saving in CO₂. Not only that, it takes two months to do the retrofit, so you get immediate savings, while building a new building takes two years. Also from our perspective, we are concerned about the number of vessels in the market. Here, you don’t add unneeded ship capacity either. So, we think that is quite a convincing story. The challenge is that this lifecycle analysis is seldom done, but I think if we are going to reach our target for global emission, not only in shipping but for the world, we really need to carefully consider when replacing makes sense, and when it actually makes more sense to try to work with what you have. I think my answer is that it is not a yes or no to retrofitting versus new building, but in many cases, it makes a lot of sense.

Dr Sanjay: You are right, I think it is ultimately really about the area under the curve when we are trying to bring down the total CO₂ load to the environment. I just want to push the point on what you are saying, not all vessels are viable for retrofitting. So, the question really is, and this alludes to your earlier comments about using data, how can we use data to suitably retrofit at the minimum cost and lead time? Do we have sufficient data that allows us to make these very strategic and important decisions?

Ms Asheim: Yes, I think we are about to get enough data. I think we need to work more on the data to make it accessible, and actually make sure the quality is good enough. But I think we are really kind of coming off the curve here. So, I think it is a huge untapped potential, enabling us to simulate different solutions, so that you don’t really have to build pilots and see how it works, but you can actually simulate it. I think that is a very important part when you do your case-by-case study, which you need to do before you do retrofits. In addition, I think it is extremely important not to be too narrow minded. You need to do a cost benefit analysis, but you have to look at the benefits with a broad perspective to it. So, what is the value of that immediate savings? How does the efficient bunkering play in? What is the benefit of not adding additional capacity to the fleet? So, don’t be narrow minded, be bold and take a holistic approach.

Dr Sanjay: Very good advice there, thank you very much. Given the uncertainties towards decarbonisation, how can we enhance the resilience, or future proof the design of vessels? In fact, to just push that envelope a bit harder, how can data coming out from retrofits influence the future design of vessels?

Ms Asheim: I think it is a potential here and I don’t think we have seen the end to that at all. It will be about when we do the retrofits, how do we make sure that we put in place the right sensors? How do we collect that data so that the quality is good enough? How do we use machine learning, artificial intelligence, all the tools that we now have a ton, to further optimise for further retrofitting possibly, but also for new designs?

Dr Sanjay: I just want to jump back to an important point that you made on financing. We haven’t seen enough of that from the banks. So, a couple of questions here. One is, why do you think the banks are slow to move despite the fact they have announced the Poseidon Principles? What level of support do you think is necessary from the banks to shift the needle, in what aspect of financing? Is it rates? What are we looking at?

Ms Asheim: I think it is not easy to be financers either, and finding how are they going to contribute here. I really support the Poseidon Principles; I think they have made a big step in the right direction. But still, they are taking a traditional approach to financing and they have their risk management tools in place, and I am not sure they are then equally suitable to the new reality that we are all working in. So, the way Poseidon Principles are working today, it’s more a stick rather than the carrot. So how they can kind of make the carrot a bit more encouraging, and how can they then provide more attractive financing when people really take courageous steps?

Dr Sanjay: Right, fair point.

Ms Asheim: But I really recognise that they have a difficult task in front of them. 

Dr Sanjay: It is, because I mean they have multiple stakeholders to ensure the proper returns are factored in. 

Ms Asheim: Sure, and can I just comment on that, because I think we all kind of want our returns, etc. When we have this ambition, and we have these targets, you maybe have to take a bit more of a risk in a period if you really want to come to those targets. So, I think that’s the discussion we all need to have, is how do we manage that together? 

Dr Sanjay: I agree, because I think the fight against climate change isn’t an option for some and a non-option for others. I think we all need to play our part, so to say, to ensure that all fronts are being well equipped to fight this battle, which is very existential in nature.

Just one more question Yngvil, around the retrofits. You alluded to this in your first comment about training. Is there sufficient material, especially when you do the retrofit, to retrain your entire force to cope with now a dual fuel scenario, a retrofitted operation scenario? Is there a room for innovation to enhance that learning curve, which I am sure is steep for some, that you will not lose operational time?

Ms Asheim: I think it is not really lack of material that is the case. Of course, when you put new technology on board the vessels, you have to train your people. I think with the digital development, what we can do when people are on board has opened totally new doors to how we do training, and how we kind of lift competence. I am more concerned about how can we think differently on creating the right human behaviour, create the awareness, create the mentality you need, so that people really not only understand, but cares about the action they take, and understand if I do this, this will influence that part and that part. It means that my colleagues need to do this in order for us to get the optimal result. I absolutely think there is room for innovation and thinking out-of-the-box.

Dr Sanjay: I think it is also to be fair to the seafarers who are already stressed in many forms. I think providing that just-in-time platform as well for training, so you don’t commit everything to memory before you get on board a ship, but having access to training materials, or reminders so to say, on how to handle the new scenario, definitely would alleviate some of the stress level of operating in a new environment, in a retrofit environment. Would you agree?

Ms Asheim: I absolutely agree. I think it is a good point, which also brings me to another point. Using all these new digital tools etc, also comes stressful for people who are not used to it. We are used to working in a mechanical world, so how can we help people to climb over that hurdle, so that the digital really becomes a help, not the burden. It is going to be very interesting, for instance, this digital twin we are building, and how we are going to use that to help both people on board and ashore to create a tool that is making them not only more efficient, but take down the stress level, which we really see is a key part of what we need to do in order to create that environment where people care, and have the capacity to care. 

Dr Sanjay: Right. I think we are just about having time to wrap up here. Any last words for the audience as they grapple with those decision making between retrofitting and investing in new builds, because we have seen the new builds order book come down dramatically for the next couple of years. Any last words of advice to the decision makers?

Ms Asheim: I think we very much, as you have understood, believe in industry wide collaboration, coupled with progressive international global regulations. Right now, we see a lot of possibilities, but it is also a lot of uncertainties. So, we all need to work together to create more certainty. I will actually quote the Singapore (Maritime Institute) International Advisory Panel that just came out with a preliminary report. I think at the end of the report, they said there are two common themes. It is about we need to collaborate and we need to act. I think I will use those words as my last words as well.

Dr Sanjay: Brilliant, Yngvil. Thank you so much for reminding us of the key drivers for success in our fight for climate change, that we really need to collaborate and leverage each other’s strengths and act as a community. 

Thank you so much for your time. We really appreciate your time today and the very insightful responses you have given to the various and very pertinent questions on the debate around retrofit and new build and our fight to adopt and adapt new fuels and new operation paradigms, in our fight against climate change. 

Thank you very much Yngvil. Stay safe and hope to see you soon when things are better with regards to the pandemic. God bless, take care.

Ms Asheim: Thank you very much for having me, and very much look forward to coming back to Singapore.

Dr Sanjay: Excellent.