Setting the Course From Emissions to Solutions: An Interview with Capt. Rajalingam Subramaniam

Thank you, King. Good to be back. Thanks for the invitation. Lovely to see colleagues, friends, collaborators, regulators, everyone in the room and outside. I can sense the energy and passion on the agenda. One year on, have we made progress? I believe as an industry we've made significant progress. Panel members before us have said the industry has moved a bit ahead of legislators, but legislators have brought needed disruption. Being ahead of the game is nothing wrong. Much more to do definitely. But we have moved forward. As an organization, MISC is not just petroleum and gas shipping. We have a fabrication yard with 120,000 metric tons capacity, where the Kasawari CCS comes in. We have an offshore division with FPSOs, FSOs, and going into new AIPs in carbon storage, ammonia FPSOs. We also manage boutique ports and terminals in Malaysia and the region, and a Maritime Academy under concession with the government of Malaysia, still 27 years left. Hopefully next year we'll add another business division. I was just in Japan last week signing term sheets for carbon management together with our majority shareholder Petronas and M. Those are some things we have done over the last year.

You brought up Chatam House rules – it got to be a bit more guarded. I am quite direct in my views. Asia Pacific – from a legislative point of view, we always hear about legislation being industrialized nation and European-centric, while Asia Pacific with its growing economies has a prominent position to play globally. But largely Asia Pacific seems to be policy followers, accepting policies rather than setting them. I find that strange. Industrialized nations polluted the world, and emerging economies need a fair chance to do what's right for society. Take Indonesia – they have enough coal to power their energy generation for the next 70-90 years, and we are asking them to skip a transition shift. We need to be fair to society. APAC needs to stand up and be counted in policy shaping. I know many APAC economies taking steps. Professor Linn and I were invited as part of Caroline's group under the G20 in Goa – it was an eye-opener. Shipping being a hard-to-abate industry – music to my ears. I heard parallel streams in cement, steel, iron talking about the same thing. Shipping is the most energy-efficient mode of transportation. The maritime industry is taking huge steps, but legislators need to do more, financiers need to do more for responsible transitioning. Last year I said financial institutions need to participate in the technology risk. Is the commodity the evil or the emissions? At the end of the day, it's societal emissions. APEC needs to be counted in a just and responsible fashion. Legislators, there is support, but financiers are not doing enough. We have a problem; we need to collaborate to manage it, not expect demand and supply to be aggregated by the industry. It has to be just and responsible.

I take Kenet's point just now – use cases, case studies. The standard narrative for future-focused products to manage societal emissions is just not there. It's a leap of faith. It brings me back to when we first started with our LNG dual fuel in a previous portfolio. We started two Aframax LNG dual-fuel vessels around 2016-2017 when I was first-year CEO. We strengthened the balance sheet and managed the transition challenge. We delivered those assets in 2018 – the Eagle Brasilia and Eagle Bintulu – without a charter or financing in place. That was a huge leap of faith for our balance sheet. We decided to equity finance them on our own balance sheet because we weren't being treated fairly in the transition risk. We needed to make a statement of intent. I'm feeling the same today in my L2s and carbon capture portfolio. The first-mover disadvantage is still there. Some with balance sheets like ours can assume that and move the needle, and we will do that. But over 50% of the shipping industry are small- and medium-sized shipowners who cannot do that. There will be divergence at the start, but convergence must happen faster than 1.5 degrees. This is for the next generation. I have three children, nieces, nephews – I look forward to grandchildren. We are talking about the next generation. Leaders of the present can retire happily, but what are we leaving behind? Financial institution leaders: don't just accept policies set by leaders. Ask questions. Tell your leaders if it needs to be shaped differently for a just and responsible transition. MISC is 55 years old this year; I've been here nearly four decades. This is a deeper transition than we've seen before. It requires industry players, legislators, and especially financial institutions to be part of the solution, not making the industry always take the first-mover disadvantage. I'm sorry for being direct, but among friends we can take that message forward.

Number one: I want to see us all remaining friends. Number two: the conversation getting more purposeful about solutions on the table in a tripartite. That's my ask of all of us. I want to thank everyone for being participative. Five years ago we would not have discussions about emissions to solutions in such an open manner. We have progressed. Shipping is hard to abate, but it's the most energy-efficient modality. We need more talent to join our industry. We need to remain attractive, seen as solution providers, not as senior leaders in nice jackets sitting in comfortable hotels. We need the younger generation to join our industry. This transition is a huge opportunity to attract emerging talent. Thank you very much, K.