Pakistan Regional Economic Integration Activity (PREIA
Carbon Footprint Assessment of Pakistan’s Shipping and Ship Breaking Sectors
Pakistan Regional Economic Integration Activity (PREIA
5537 views
Posted date 6th May, 2024 Last date to apply 27th May, 2024
Category Consultancy

Introduction:

The Pakistan Regional Economic Integration Activity (PREIA) works to increase Pakistan’s access to regional and international markets and is a key economic growth project that stands to benefit numerous Pakistani businesses. This project has two components: Component 1 aims to improve Pakistan’s business enabling environment so that policies, laws, and regulations are adaptable and more reflective of on-the-ground needs; and Component 2 is geared towards improving Pakistan’s capacity to access regional markets by identifying bottlenecks and practical solutions for increasing export efficiency and lowering trade costs.

To help Pakistan achieve improved capacity to access regional markets, Component 2 addresses constraints at Pakistan’s borders that adversely affect trade and transit traffic with neighbouring countries. PREIA’s technical assistance under this component is two-pronged: 1) improving customs facilitation; and 2) promoting regional integration. Towards that end, PREIA engages with key Government of Pakistan stakeholders, such as the Ministry of Commerce, the Federal Board of Revenue, and the Pakistan Single Window Company (PSWC).

PREIA’s efforts so far have helped the GoP increase automation within Pakistan Customs and other government agencies (OGAs), to increase efficiencies and transparency; and has helped both the GoP and the private sector involved in trade leverage international best practices and technology to increase trade and transit competitiveness. In Year 9, the project will leverage the momentum of reforms developed in the previous years to support aligning trade policy and investment with climate change risk mitigation and adaptation.

The landscape for global trade is continuously evolving with innovations in trade technology, digitalization, however emerging vulnerabilities arising from climate change are challenging existing trade frameworks, policies, and patterns. There is a growing realization that implementation of environmental standards in international trade is now an important matter and organizations are more cognizant of their impact on climate change. As the world ramps up its response to the threats posed by climate change, it is possible that in future harmonization with climate related standards may become a serious competitiveness issue for the country’s organizations. 

Background:

“Green shipping”, in general, refers to use of resources and energy to transport people and goods by sea in a manner that preserves the global environment from Greenhouse Gas (GHG) emissions and other environmental pollutants generated by ships. The Green Shipping Challenge is an initiative launched by the United States and Norway at COP27 in 2022. The goal of the challenge is to encourage countries, ports, and companies to make commitments to reduce greenhouse gas emissions from shipping. The Green Shipping Challenge[1] focuses on various aspects of the shipping sector, including vessel operations, fuel choices, technological advancements, and supply chain management. It encourages the implementation of energy-efficient measures, the use of clean fuels, and the development of renewable energy sources for powering ships. The Green Shipping Challenge encourages countries, ports, companies, and other actors in the shipping value chain to come forward with concrete announcements that will help put the shipping sector on a pathway this decade to align with the goal to limit global temperature rise to 1.5 degrees Celsius. Since the launch of the challenge, more than 40 countries, ports, and companies have made commitments to reduce emissions from shipping. These commitments include investing in new technologies, developing green shipping corridors, and adopting new policies. The Green Shipping Challenge is a significant step forward in the fight against climate change.

From the operational point of view, green shipping must comply with the environment-related operating conditions regulated by the International Maritime Organization (IMO). These conditions are described by conventions such as MARPOL 73/78, the Convention on Oil Pollution Preparedness, Response, and Co-operation regarding Hazardous and Noxious Substances (OPRC-HNS), the Anti fouling Systems (AFS) Convention, the Ballast Water Management (BWM) Convention, and the Ship Recycling Convention. Each country also has / may have its own set of domestic regulations and management standards that aim to manage and monitor all harmful substances (marine pollutants and air pollutants) emitted.

On average shipping accounts for 2.5% of global GHG emissions according to the Fourth IMO Greenhouse Gas Study based on 2012-2018 data. The International Maritime Organization (IMO) announced in 2018 its goal of reducing GHG emissions by 50% from 2008 to 2050, though this target still falls short of contributing enough towards keeping the global temperature rise below 1.5%. Since the demand for shipping operations is likely to outpace the adoption of transition to low carbon or zero emission shipping operations, various coalitions of key industry stakeholders including carriers, freight forwarders, and shippers, are vying for more ambitious targets.  For example, the Getting to Zero Coalition aims for commercially viable deep sea zero emission operations by 2030, and for complete decarbonization by 2050.

Within the transportation sector, shipping claims the third position in terms of carbon dioxide emissions, comprising 11% of the global total, trailing closely behind passenger vehicles at 39% and medium to heavy trucks at 23%. Due to the increase in global trade and the demand for maritime carriage of goods, the sector’s carbon footprint, primarily because of CO2, is poised to potentially surge by 50% to 250% by the year 2050 if proactive measures are not taken. Ships require energy to operate. While cleaner fuels are gradually gaining traction, shipping companies continue to depend on fossil fuels like marine gas oil and heavy fuel oil. The combustion of Heavy Fuel Oil (HFO) results in the release of harmful gases, including carbon dioxide (CO2), methane (CH₄), and nitrous oxide (N₂O), all of which contribute to the problem of climate change. In addition, ships produce sulfur oxide (SOx) emissions, which, although not directly affecting the climate, pose significant environmental and health risks.

IMO is actively working on implementing a global sulfur cap on marine fuels as part of its efforts to reduce emissions stemming from the shipping sector. For example, the organization has established the Mediterranean Sea Emission Control Area (ECA)[2] to regulate sulfur oxides and particulate matter emissions. This decision was made in December 2022, with the Mediterranean supporting 20% of seaborne trade with several busy maritime routes. Besides, the European Parliament has endorsed changes to the EU ETS[3], extending its coverage to include all maritime emissions. This expansion applies to ships exceeding 5,000 gross tonnages operating within the European Economic Area (EEA)[4]. As a result, every company with vessels engaged in EEA trade must submit emission allowances equivalent to a portion of their greenhouse gas (GHG) emissions during a given calendar year. The Clean Cargo Working Group[5] (CCWG) also developed a standard methodology for emissions accounting and benchmarking in the ocean shipping sector.

Pakistan is an important coastal state, with a 990KM coastline, with its three ports directly across from one of the world’s most important energy corridors in the form of the Persian Gulf and the Gulf of Oman. Shipping industry plays a crucial role in Pakistan's economy, constituting 90% of Pakistan’s trade and contributing significantly to GDP. Despite its own modest fleet of 57 ships, Pakistan spends around $5 billion/year on international freight, with some 3-4,000 ocean liners visiting Pakistani ports each year – one of the largest potential growth sectors for the country. Further, as Pakistan becomes more integrated with Central Asian economies, these states are hoping for efficient and reliable access via Pakistan’s ports. Uzbek companies, for example, are already utilizing Uzbekistan-Pakistan bilateral transit trade arrangements to bring in cargo via the Karachi port.

“Ship breaking” refers to the practice of dismantling ships that have reached the end of their useful lives and breaking up its constituents into steel and other recyclable materials. Because nearly every component of a ship can be recycled into some form of scrap metal for reuse, the practice of ship breaking is considered an ecologically and environmentally friendly method for discarding outdated sea vessels. Despite the advantages, the main issue with the industry remains that a vast majority of global ship breaking activities have shifted to undeveloped and developing countries that provide cheap labor and, therefore, have weak enforcement structures for safety and environmental regulations. This means that the discarded ships piling up at ship breaking yards of these countries start to pose serious negative consequences for both the people and the environment of that region due to the hazardous waste materials and pollutants (asbestos, polychlorinated biphenyls, ozone-depleting substances, heavy metals etc.) released from the scrapped vessels.

The ship breaking industry in South Asia in general has been under pressure in recent years because of the alleged abuse of the environment and the adverse effects that the operation of ship breaking yards have on the ecosystem surrounding them. On the one hand, the industry plays an important role in commercial and economic activity of the region, creates employment opportunities, and serves to supply raw material to core industries since most of the countries involved in the ship breaking process have a large appetite for scrap steel. Pakistan and Bangladesh, for example, use the steel from recycled ships in local mills where the steel is rerolled and used directly in associated industries, such as construction. On the other hand, the hazardous waste materials released into the environment and associated occupational health risks arising from ship breaking operations pose a significant national and global concern. The key is to help all stakeholders strike a balance between economic and environmental goals by enabling the uptake of environmentally sustainable ship breaking and recycling operations.

For Pakistan, 2023/2024 are critical years for the revival of the ship breaking industry, as shipowners around the world renew and upgrade their fleets to comply with new International Maritime Organization (IMO) Greenhouse gas (GHG) emission regulations. The massive influx of new constructs expected in the coming years means that a large number of containerships are likely to be recycled, and Pakistan must act in urgency to gain a larger share of the demand for shipbreaking and recycling services.

The shipping and ship breaking industry plays a crucial role in Pakistan's economy, facilitating trade and contributing significantly to GDP. However, it also comes with a significant environmental cost in the form of greenhouse gas emissions, contributing to climate change.

Assessing and addressing the carbon footprint of the Pakistani shipping and ship breaking industry is crucial for sustainable development. However, benchmark data on the carbon footprint of the Pakistani shipping industry is limited. While Pakistan reports its total greenhouse gas emissions to the UNFCCC[6], disaggregated data specific to the shipping sector is unavailable. Developing and understanding GHG data for the Pakistani shipping and ship breaking industry is essential for several reasons:

  • GHG mitigation: Understanding sources and owners of GHG emissions within the shipping value chain enables identification and design of mitigation options, policies, and incentives.
  • Transparency and accountability: Enable tracking progress towards GHG emissions reduction goals and facilitates informed decision-making.
  • Investment opportunities: Attract green investments by demonstrating environmental commitment and providing data for project assessments.
  • Policy development: Informs effective policy measures to promote sustainable practices in the sector.

Developing a profile of GHG emissions for the shipping industry requires a multi-pronged approach. First and foremost, its important to map major sources of GHG emissions across the shipping and ship breaking value chains.  Second, effective data collection mechanisms must be established by collaborating with shipping companies, port authorities, and relevant government agencies to generate data on fuel consumption, vessel types, travel distances, and cargo volumes. Utilizing established emission factors from international organizations like IMO or developing region-specific factors is essential. Standardization is crucial, necessitating the adoption of internationally recognized methodologies and reporting protocols for consistency and comparability. A phased approach is recommended, starting with readily available data and gradually refining the methodology as resources permit. Capacity building is also integral, involving the training of stakeholders on data collection, emission calculations, and reporting procedures to enhance the overall effectiveness of the benchmark development.

Objectives and Scope

USAID PREIA has led the national conversation on a green shipping transition. PREIA organized extensive stakeholders’ workshops in FY 2023 which were aligned with the main categories covered in the UN Green Shipping Challenge. All relevant shipping stakeholders participated in these workshops including senior officials from federal and provincial governments, port and terminal operators, shipping lines, logistics companies, electricity utility provider, donor funded organizations and other relevant private sector associations and organizations. Additionally, the Pakistan Single Window (PSW), a successful flagship initiative conceived and launched by PREIA, is underway and is now planning to launch a “Port Community System,” in Q2 2024, (for which some of the feasibility work has been through TA support from PREIA), which will be an automated system to simplify and digitize processes related to port logistics, reducing ship waiting times, and leading to GHG reduction. 

The primary goal of these workshops was to facilitate the development of recommendations for announcements by the Government of Pakistan at COP 28 in Dubai, United Arab Emirates. The recommendations focus on one or more of the categories of the UN Green Shipping Challenge and represent a meaningful commitment that is being undertaken in Pakistan. The participants of the workshops proposed valuable input and outlined specific areas in which actions by both public sector and private sector could move the green shipping agenda forward in Pakistan. Led by U.S. Deputy Chief of Mission Andrew Schofer, the United States reaffirmed its commitment to partnering with Pakistan in promoting sustainable shipping.[7]

After extensive consultation, stakeholders proposed following key recommendations:

  1. Pursuit of a Green Shipping and Ports National Action Plan
  2. Pioneering Move to Incorporate Shipping and Ports in Ambitious GHG Emission Reduction Targets
  3. Pledge to Collaborate on Zero Emission Shipping
  4. Port Efficiency Overhaul to Reduce Emissions
  5. Ambitious Port Transformation Plans and Green Fund Allocation
  6. Drive Towards Emission Reduction by Nurturing Terminal Operator’s Green Initiatives
  7. Exploration of Biogas-Based Methanol Production Near Ports
  8. Commitment to Mangrove Preservation for a Sustainable Future

 

Building on these recommendations and PREIA’s interaction with stakeholders, the following intervention has been proposed:

 

  • Conduct an initial high-level Carbon Footprint assessment for the shipping and ship breaking sectors of Pakistan and develop a roadmap which outlines how companies and other actors in these sectors can reduce GHG emissions in alignment with Pakistan’s Updated Nationally Determined Contribution (2021). The Government of Pakistan has set a cumulative and conditional target of overall 50% reduction of its projected emissions by 2030. Pakistan will now include Ports and Shipping in this ambitious target. This action will interlink with Pakistan’s pledge to join the Zero Emission Shipping and Green Ship Breaking Mission.

 

Specific objectives of the activity will be as follows:

  1. Map major sources of GHG emissions to assess the landscape of emissions from the shipping and ship breaking value chains as per internationally recognized standards and rules. This would help to understand market actors responsible for improving the GHG emissions performance of the shipping and ship-breaking sectors. The assessment should rely on publicly available data; it may include extrapolations; and could involve interviews with key industry stakeholders.  
  2. The GHG analysis should organize sector-wide emissions into key sub sectors and activity types (i.e, energy generation including onshore power units, vessels, light and heavy duty vehicles, cranes, buildings, waste). This should include assessment of the activities, technologies, emissions reported and method of reporting, validation process etc.
  3. Conduct supply chain mapping including challenges, opportunities, risks, issues in the shipping and ship breaking sector and compare it with international best practices. This also includes GHG emissions performance assessment methods/tools including but not limited to emission intensity, absolute emissions and absolute emissions targets.
  4. Develop GHG emission scenario to 2030 using internationally recognized methods including but not limited to 1) Pledges scenario, 2) a 2 Degrees scenario and 3) a Below 2 Degree scenario.
  5. Identify international low-emission and decarbonization laws, initiatives and plans related to shipping and ship breaking. Compare those initiatives and plans with existing rules and laws in Pakistan and suggest recommendations for how to improve Pakistan’s policy framework in support of a green transition for shipping.
  6. Review Pakistan’s commitments to the international conventions and collaborate with relevant stakeholders, including the Ministry of Climate Change (MOCC), Ministry of Maritime, and other key partners, to develop a Roadmap that guides initiatives towards a net-zero emission shipping industry in Pakistan.
  7. Provide training and technical assistance to shipping companies focusing on GHG emissions inventories, interventions to reduce GHG emissions, and design of decarbonization plans.

Tasks (Performance Requirements)

The company/firm would be required to perform the following specific tasks:

  1. Conduct an initial assessment of the GHG emissions in the shipping and ship-breaking sectors according to internationally recognized standards and rules. Map the major sources of GHG emissions across the shipping value chain and key stakeholder groups. Provide insights into the major opportunities to reduce GHG emissions.
  2. Characterize the GHG emissions value chain according to sectors and sub-sectors within shipping and ship breaking and describe the types of stakeholders who control each type of GHG source and who would be responsible for reducing and/or regulating GHG emission reductions for each type. Assess activities, technologies, emissions reporting, validation processes, and other relevant factors.
  3. Map supply chain GHG emissions for the shipping and ship-breaking sector, identifying challenges, opportunities, risks, and issues. Compare the supply chain mapping with international best practices in GHG emissions accounting methods/tools, including emission intensity, absolute emissions, and absolute emissions targets.
  4. Develop GHG emission reduction scenarios using internationally recognized methods, including Pledges scenario, a 2 Degrees scenario, and a Below 2 Degree scenario. Analyze the results and provide insights into the implications of each scenario for the shipping and ship breaking sectors.
  5. Compare emissions reduction pathways of stakeholders in the shipping and ship-breaking sectors to benchmark pathways based on emissions and activities in the international marine freight sector.
  6. Identify and assess international decarbonization laws, initiatives, and plans that impact the shipping industry and its value chain. Compare these initiatives with existing rules and laws in Pakistan. Develop recommendations for aligning with and achieving international decarbonization targets within the Pakistani context.
  7. Provide support to 3-5 stakeholders in the shipping and ship-breaking industry for measurement of their carbon footprints. Offer guidance, tools, and resources for improving their carbon footprints.
  8. Design and deliver a training on how to measure and reduce GHG impacts.

 

Required Deliverables and Payment Schedule

The company/firm will be responsible for delivering the following: 

  1. Draft and final workplan of the project. (15% Payment)
  2. Identify 3-5 companies in shipping and shipbreaking to support with measurement of their carbon footprints through at least 1 site visit in each subsector and provision of remote technical assistance. Offer guidance, tools, and resources for assessment and improvement of carbon footprints and emission reduction scenarios (Ongoing throughout Period of Performance). (15% Payment)
  3. Prepare and deliver draft and final 2-day training program in Karachi (private sector stakeholders) and Islamabad (public sector stakeholders) on how to 1) conduct a carbon footprint assessment, 2) identify interventions to reduce GHG emissions from the shipping and ship breaking value chains, and 3) develop GHG emission reduction scenarios for the shipping and ship breaking industry. (30% Payment)
  4. A draft and final report which 1) characterizes the GHG emission landscape of the shipping and ship breaking supply chains in Pakistan, 2) describes the results of the initial carbon footprint assessment, 3) identifies interventions to reduce GHG emissions from major GHG emission sources in the shipping value chain, organized by stakeholder types such as (but not limited to) local governments, port operators, shipping companies, equipment operators, and ship breaking facilities, 4) summarizes international trends and policies to decarbonize shipping, and 5) provides recommendations for how to phase these policies and measures in to the shipping and ship-breaking sectors in Pakistan considering the roles of various sectors and stakeholder groups. (40% Payment)

Qualification and Experience

Eligible firms should have the following qualifications and experience:

  1. Minimum 5-7 years of experience assessing GHG emissions, benchmarking, and supply chain mapping in relevant industries, particularly shipping and ship-breaking sectors.
  2. Technical proficiency in utilizing internationally recognized standards and tools for carbon footprint assessments, benchmarking, emission scenario development, and supply chain mapping.
  3. In-depth understanding of the shipping and ship-breaking sectors, including relevant regulations, industry practices, and environmental considerations.
  4. Successful execution of similar projects at international level involving carbon footprint assessments, benchmarking, and supply chain mapping in comparable industrial settings.
  5. Familiarity with and adherence to international standards and scenarios for carbon footprint assessments, ensuring alignment with recognized benchmarks.
  6. Proficiency in understanding and comparing international decarbonization rules, laws, initiatives, and plans with existing regulations in Pakistan, providing valuable recommendations.
  7. Proven ability to engage with diverse stakeholders, including industry representatives, government officials, and international organizations.
  8. Experience in providing support and guidance to stakeholders for accurate carbon footprint measurement, coupled with the ability to develop and deliver effective training programs.
  9.  According to the approved geographic code for its contract, DAI is permitted to obtain goods and services solely from the United States, the cooperating country, and "Developing Countries," with the exception of "Advanced Developing Countries" and prohibited nations. The list of "Developing Countries" and "Advanced Developing Countries" can be accessed at the following links:
    1. For "Developing Countries": https://www.usaid.gov/ads/policy/300/310maa
    2. For "Advanced Developing Countries": https://2012-2017.usaid.gov/ads/policy/300/310mab

Base of Operations: 

Can be international or Pakistan, although in-person/physical participation is encouraged. International companies/firms are encouraged to form consortiums with local partners. Will require substantive in-country work/consultation sessions with sector professionals in Karachi and Islamabad. The selected company/firm will be responsible for covering all travel-related expenses incurred during the activity.

Reporting:

The company/firm will report to the Regional Trade Promotion Advisor, USAID PREIA. 

Payment Schedule

Please refer 11.1.3 above for details.

(Please use attachment 11.2 template)      

Estimated Completion Time

The assignment is to be completed over a period of 2 months by 31st, July 2024.



[7] https://pk.usembassy.gov/u-s-deputy-chief-of-mission-reaffirms-commitment-to-green-shipping/

Apply By:

Type of Award Anticipated


DAI anticipates awarding a Firm Fixed Price Sub-Contract. This subcontract type is subject to change during the course of negotiations.

Instructions

“Offeror”, “Subcontractor”, and/or “Bidder” means a firm proposing the work under this RFP. “Offer” and/or “Proposal” means the package of documents the firm submits to propose the work. Offerors wishing to respond to this RFP must submit proposals, in English, in accordance with the following instructions. Offerors are required to review all instructions and specifications contained in this RFP. Failure to do so will be at the Offeror’s risk. If the solicitation is amended, then all terms and conditions not modified in the amendment shall remain unchanged.

Proposals are due no later than May 27, 2024 (5:00 PM Pakistan Standard Time) to be submitted on [email protected]. Late offers may only be accepted under extraordinary circumstances at PREIA’s discretion.
The submission to DAI of a proposal in response to this RFP will constitute an offer and indicates the Offeror’s agreement to the terms and conditions in this RFP and any attachments hereto. DAI reserves the right not to evaluate a non-responsive or incomplete proposal.

  • Offers must show unit prices, extensions, and total price. Proposal must be a fixed price, expressed in US Dollars or Pak Rupee.

  • Offerors are asked to specify the available resources and the total number of calendar days it will take to complete the assignment.

  • Bidders must provide fixed prices, inclusive of all applicable tax. Tax at source will be deducted from all payments as per government rules, unless a valid exemption certificate is provided by the supplier.

  • Small/ medium size business, minorities owned firms, women led business and those owned by other disadvantaged groups will be given preference, in any such case additional documentation must be provided along with Proposal.

  • Only those bids will be considered which are prepared in legible writing and are absolutely clear and unambiguous. Any unavoidable cutting/over-writing must be signed and stamped by authorized signatory of the bidders

  • Submission of Proposal against this RFP would automatically mean that supplier agrees to all the terms and conditions mentioned in this RFP.

  • Arithmetical errors will be rectified on the following basis:

    • -  If there is a discrepancy between the unit price and the total price that is obtained by multiplying

      the unit price and quantity, the unit price shall prevail, and the total price shall be corrected.

    • -  If there is a discrepancy between words and figures the amount in words shall prevail.

    • -  If the Offeror does not accept the correction of errors, its Proposal will be rejected.

    • -  A cover letter shall be included with the proposal on the Offeror’s company letterhead with a

      duly authorized signature and company stamp/seal using Attachment B as a template for the

      format. The cover letter shall include the following items:

  • The Offeror will certify a minimum validity period of 90 days for the prices provided.

  • Acknowledge the solicitation amendments received.

Search