The maritime industry stands at a pivotal point in its history, grappling with the urgent need to reduce carbon emissions. At a recent Clean Energy Finance Corporation (CEFC) webinar, Keith Halifax, Chief Operating Officer at Flinders Port Holdings in South Australia, shared valuable insights into the challenges and strategies involved in decarbonising port operations.
Understanding the unique position of Flinders Port Holdings
Flinders Port Holdings operates a highly active port compared to its counterparts in other Australian capital cities. Unlike many ports that primarily serve as transit points, Flinders manages not only the port itself but also container terminal operations, landside logistics, and warehousing businesses. This integrated approach results in higher Scope 1 and Scope 2 emissions, given the extensive use of heavy equipment like cranes, straddle carriers, reach stackers, and container handlers, as well as smaller fleets such as forklifts.
“Our operational role inside the port is significantly higher,” Keith explained. “This means our carbon emissions are greater, posing challenges in terms of heavy plant equipment and the need for decarbonisation.”
The importance of measuring and managing emissions
Before embarking on decarbonisation initiatives, Flinders Port Holdings prioritised understanding the scale of their carbon footprint. Keith emphasised the necessity of getting “a really good handle on where your carbon is being emitted.” This comprehensive assessment allows the company to identify areas where emissions can be reduced effectively through lifecycle reinvestment of assets.
By focusing on detailed emissions data, Flinders can make informed decisions about where to allocate resources for maximum impact. “That’s how you can start to practicalise the investment decisions necessary to ultimately transition your entire operations to net zero,” Keith noted.
Embracing incremental improvements
While the ultimate goal is net-zero emissions, Keith highlighted the significance of incremental progress. “Sometimes we can all be a little bit guilty of wanting to jump right to the end game,” he said. “But recognising the importance of the 1%, the 10%, the 15% improvements is crucial.”
Flinders is actively exploring ways to achieve these incremental gains. For instance, they are considering transitioning from diesel or hybrid-powered straddle carriers to fully electrified models for landside container terminal operations. In other areas, such as heavy forklifts and other heavy plant equipment, even a 25% to 30% reduction in carbon emissions is deemed a meaningful contribution to the company’s overall carbon budget.
Future-proofing maritime operations
Flinders Port Holdings also operates all pilotage functions in South Australia, managing 15 to 20 diesel-powered vessels. As part of their reinvestment cycle, they are constructing new vessels designed to accommodate future propulsion systems. “We’re building larger vessels where we’ll be able to retrofit engines that support alternative fuels,” Keith explained. This forward-thinking approach ensures that the company remains adaptable as new technologies emerge.
Addressing infrastructure challenges
One of the significant hurdles in decarbonising port operations is the availability of adequate electrical infrastructure. The electrification of fleets and equipment dramatically increases electricity demand. “The demand profile for electricity will go exponentially higher,” Keith warned. “The electrical infrastructure near our facilities doesn’t have the capacity to provide that level of power.”
To tackle this issue, Flinders is engaging in innovative solutions like behind-the-meter microgrids and incorporating renewable energy sources such as solar power. Additionally, equipment like cranes can generate energy during operation, which can be captured and reused, contributing to overall efficiency.
The role of ports in facilitating decarbonisation
Keith underscored the critical role that ports play in the broader decarbonisation of supply chains. As natural nodes for trade, ports can act as facilitators for both sea and land transport decarbonisation efforts. “We are facilitators of cargo, and we have a very active role in supporting decarbonisation across supply chains,” he stated.
Flinders is keen on providing common-user infrastructure that supports decarbonisation, such as shore-based power for vessels and green fuel bunkering facilities. On the landside, they are exploring ways to offer charging infrastructure for electric trucks and support for rail electrification. This approach not only aids larger operators but also provides opportunities for smaller companies that may lack the capital to invest in new technologies independently.
Collaboration and industry partnerships
Recognising the complexity of the challenges ahead, Flinders Port Holdings is actively collaborating with industry partners and government bodies. “We’re involved in a number of consortium groups, including SA Zero, which involves both government and private partners exploring how to power the grid and meet the growing demand,” Keith shared.
Such partnerships are vital for sharing knowledge, resources, and best practices, enabling the industry to progress more rapidly towards decarbonisation goals.
Incorporating carbon pricing into investment decisions
A crucial aspect of Flinders’ strategy is integrating carbon pricing into their investment decision-making processes. Keith emphasised the importance of traditional financial metrics like Internal Rate of Return (IRR) and Net Present Value (NPV), but with a modern twist. “Investment rationales need to start to consider and place, ultimately, dollars on carbon,” he argued.
By assigning a monetary value to carbon emissions—currently using an internal carbon price of $25 per tonne—Flinders can better assess the long-term costs associated with emissions, including the future expense of offsets. This approach encourages more sustainable investment choices that align with decarbonisation objectives.
Navigating international trade dynamics
The global nature of maritime trade means that decarbonisation efforts—or the lack thereof—in other countries can impact Australian ports. Keith acknowledged that inconsistent decarbonisation standards internationally could affect trade volumes. However, he is optimistic about emerging concepts like “green corridors,” where shipping lines commit to decarbonised routes supported by ports offering necessary infrastructure.
“Ports need to support shipping lines by providing the energy and infrastructure to meet their commitments,” he said. This alignment can influence how trade routes are established and maintained, potentially reshaping supply chains to prioritise sustainability.
Looking ahead: Transparency and market evolution
Keith believes that increased transparency and reporting will be significant drivers of change within the industry. As companies disclose their carbon emissions and sustainability practices in annual reports, market expectations will evolve. “Your behaviour is going to be out there in the marketplace,” he noted. “That’s where you will start to see companies place more value on investment decisions and reinvestment cycles that push them along this journey.”
Over time, what may currently be seen as a premium for decarbonised services is expected to become the market standard. Customers and stakeholders will increasingly demand sustainable practices, making decarbonisation not just an ethical imperative but a business necessity.
Committing to a sustainable future
Flinders Port Holdings is actively navigating the complex path towards decarbonisation. By understanding their emissions, embracing incremental improvements, and investing in future-ready technologies, they are setting a precedent for the maritime industry in Australia.
The journey is fraught with challenges, from infrastructure limitations to the need for international collaboration. However, through strategic planning, partnerships, and a commitment to integrating sustainability into every facet of their operations, Flinders Port Holdings is contributing significantly to a greener future for global trade.
