New Sustainable Sea Route Offered to Indonesia
Translator
Editor
15 February 2024 15:54 WIB
In 2023, NSR freight traffic amounted to 36.254 million tons vs. 7.47 million tons in 2016. Indonesia cannot ignore this factor if it intends to keep its position as the maritime transportation leader in the Asia-Pacific region.
According to Halldór Jóhannsson, Arctic Portal.org Executive Director, due to the growing economic importance of South East Asia, it is highly likely that the Northern Sea Route will be an increasingly important transport route in the years and decades to come. The Arctic infrastructure has been improved in recent years and this positive development leads to the opening of more business opportunities for all potential users of this additional global maritime route.
Russia has made the Northern Sea Route one of its priorities in the Arctic. Its world's only nuclear icebreaker fleet helps to overcome the NSR ice conditions. The plan for transforming the NSR into an international shipping artery covers many areas from developing the cargo base, transport infrastructure and fleet to ensuring the safety of navigation along the NSR.
International businesses, primarily Asian and Middle Eastern companies, show considerable interest in the transit potential of this route. For instance, in December 2023, the NSR’s infrastructure operator Rosatom and the largest Dubai port operator DP World signed an agreement of strategic cooperation in the global market. As reported by Reuters, under the agreement, the companies intend to create a global logistics operator in order to reinforce the logistical integration of BRICS members with partner countries.
Another important issue is ecology
The growth of Asia-Pacific economies is accompanied by an intense anthropogenic impact on the environment. In Indonesia, the transportation sector (25%) is the second largest source of greenhouse gas emissions after the energy sector (43%). The emergence of new international routes should facilitate the “unloading” of widely used sea corridors.
It is also important that starting in 2024 foreign exporters of goods to the EU will be obliged to compensate for harmful atmospheric emissions when their ships enter the region's countries. Thus, the Emissions Trading System (ETS) will cover CO2 emissions from all large vessels entering EU ports, including ferry operators like DFDS.
To ensure a smooth implementation of the ETS, shipping companies will be granted a transition period. In 2024, they will buy quotas for 40% of their total emissions. This figure will increase to 70% in 2025 and eventually reach 100% in 2026.
Since Indonesia is an active exporter, including of raw materials, the country's authorities pay close attention to this issue. From January to May 2023, overall imports of Indonesian commodities to the EU increased by 45% compared to the same period last year. At the same time, the transportation of goods from Russia to Indonesia via the NSR makes it possible to save on payments for greenhouse gas emissions under European ETS.
Nevertheless, not only Europe is concerned with environmental problems. Russia is actively developing special programs and digital tools for the Arctic. For example, Rosatom regularly evaluates the current state of the environment in NSR waters as a part of the joint project with Lomonosov Moscow State University Marine Research Centre (MSU MRC). This careful monitoring ensures that the intensification of navigation does not harm the environment.
The state of the sea route is monitored by vessels operating in NSR waters. Scientists collect and analyze a vast volume of information in order to track the environmental situation and identify the maximum levels of environment burned along the ship routes. The project relies on new digital services for measuring the shipload, detecting hydrocarbon pollution, calculating the carbon footprint of the vessels, and identifying the breach of protected areas. All this is in line with the interests of Indonesia, which advocates environmentally friendly transportation as long as it is profitable and stable.
“Russia has significant potential in the field of ecology in the Arctic zone,” notes Ivan Petrov, Professor at the Financial University under the Government of the Russian Federation, Full Member of the Academy of Mining Sciences. “And the current regulatory framework allows us to implement industrial and transportation projects only in strict compliance with environmental requirements.”
Smart choice and response to emerging challenges
The energy sector is an essential element of any state's economic activity, while a reliable and affordable energy supply is a driver of Indonesia's economic growth. Amid the events that affect the global logistics system stability on the one hand and the country's high demand for energy resources on the other, shipping security and sustainability have become obvious priorities. In this regard, the NSR can serve as a unique new route with great potential for cooperation in the field of transit freight traffic.
INFO TEMPO
Click here to get the latest news updates from Tempo on Google News
