Maersk moves to greener fuel

Shipping giant Maersk will become major green hydrogen consumer as it embraces methanol fuel, according to Rechargenews.com, the specialist website covering renewable energy transitioning. It reports that the Danish multinational has ordered 12 methanol-powered container vessels from shipbuilder Hyundai Heavy Industries.

The company initially placed an order for eight of the vessels, which measure 350 metres by 53.5 metres, in August 2021 and has now increased its order to 12. Maersk says when once the ships are delivered in 2024 and 2025 it will reduce its annual CO2 emissions by 1.5 million tonnes. Each is powered by “carbon-neutral” green methanol produced either from biogas/biomass or renewable hydrogen combined with captured carbon dioxide.

Maersk is the first major shipping company to make its operation greener by opting for methanol and the decision that could have far-reaching consequences. “It's a wise move if you're looking at what's the path of least resistance from a ship design perspective,” Bryan Comer, marine programme lead at non-profit International Council on Clean Transportation (ICCT), tells Recharge.

The company now faces the challenge of procuring enough biomethanol or “e-methanol” (electro-methanol derived from green hydrogen produced using renewable electricity) to meet its demand — and to ensure that ports create new bunkering facilities to allow the 12 new US$175 million vessels to be refuelled.

Berit Hinnemann, Maersk’s head of decarbonisation business development with responsibility for methanol sourcing, says that both types will be needed. “We see that biomethanol may be faster to scale on the shorter and medium-term, and e-methanol will probably scale afterwards,” she tells Recharge’s sister publication TradeWinds.

“We are engaging with project developers globally, and in general what we see is we will need close collaboration across the value chain.”

Recharge reports that the global maritime sector currently emits 940 million tonnes of CO2 annually — 2.5% of the world’s greenhouse gas emissions according to the International Maritime Organisation, as the bunker fuels it relies upon are among the most carbon-rich fossil fuels.

If the world is to reach its net-zero emissions target by 2050, this dirty fuel needs to be replaced with carbon-free or carbon-neutral alternatives, such as hydrogen, ammonia (NH3) and methanol (CH3OH).

While most green hydrogen projects in the pipeline aim to sell compressed or liquefied H2 or green ammonia made by combining the hydrogen with nitrogen from the air, a few projects plan to produce green methanol. Swedish developer Liquid Wind plans to build 10 commercial-scale e-methanol plants by 2030, while Gasunie New Energy and chemicals firm Nouryon is developing a 20MW facility in the Netherlands. Methanol is mainly produced from natural gas and used to make chemicals such as formaldehyde, acetic acid and propene for plastics, paints, and cosmetics.

Greg Dolan, chief executive of trade association Methanol Institute, tells TradeWinds that about one million tonnes of biomethanol and e-methanol is likely to be available by 2025, reaching two million tonnes by 2030, adding “That is just from announced projects. Basically, every week there is a new announcement.”

He says that biomethanol feedstock, for example from waste streams, is widely available and can be cost-competitive when compared with conventional dirty methanol. “In some cases... somebody will pay you to take their garbage, so we see biomethanol even today can be affordable.”

The ICCT’s Comer explains that not all green methanol is the same when it comes to lifecycle greenhouse gas emissions, and evaluating whether Maersk achieves its carbon-neutral goal will require it to be open about its calculations.

“We need to have them calculate the lifecycle emissions of that feedstock... in a way that their assumptions are transparent, that their methodology is transparent. That way other groups like ourselves can validate their results and see if we agree.”

Carina Krastel, commercial director of the European Green Hydrogen Acceleration Center, tells Recharge that Maersk’s methanol ships provide an example of how expensive renewable H2 can be made commercially viable without subsidies.

“Maersk knows that they can pass [the extra costs from using green methanol] on to [climate-conscious] end customers, for example, an Amazon or a Nike — those guys that actually buy big logistics solutions,” she says.

TradeWinds reports that Maersk’s move into methanol has already sparked interest from others in the potential maritime fuel, with Singapore-based X-Press Feeders ordering 16 small methanol-powered container ships from two Chinese shipbuilders. Maersk also ordered a small methanol feeder vessel from Hyundai in February 2021, with the annual 10,000 tonnes of green methanol required to be supplied by a unit of Danish renewables developer European Energy.

Switzerland tests digital currency payments

Switzerland's central bank said it has successfully used digital currency to settle transactions involving five commercial banks, marking the latest trial of the technology in wholesale markets.

In a joint release with the Bank for International Settlements (BIS) Innovation Hub and SIX Swiss Exchange, the Swiss National Bank (SNB) announced the findings of the second phase of Project Helvetica, which could bring the introduction of central bank digital currencies (CBDCs) a step nearer in Switzerland,

Central banks across the world have stepped up work on CBDCs, in part to make existing payment systems more efficient and to counter the challenge from cryptocurrencies, with research focusing on versions for both wholesale and retail use. Switzerland has been at the forefront, conducting some of the most advanced central bank digital currency (CBDC) experiments in Europe.

Puneet Singhvi, Head of Digital Assets, ICG at Citi – which along with Credit Suisse, Goldman Sachs, Hypothekarbank Lenzburg and UBS was one of five commercial banks involved in the test – commented: “Collaborating with partners on digital asset solutions is an important part of our strategy as we continue to research and expand our capabilities. The findings of Project Helvetia Phase II are a positive step forward in demonstrating that wholesale CBDCs can be integrated into central and commercial banking systems.”

SNB reported that the tests, which used fictitious transactions, covered a wide-range of transactions in Swiss francs – interbank, monetary policy and cross-border. “Integrating a wholesale CBDC into existing core banking systems is complex and a key prerequisite for issuance,” it added. “Phase II of Project Helvetia successfully demonstrates that such integration is operationally possible. Issuing a wholesale CBDC on a distributed ledger technology (DLT) platform operated and owned by a private sector company is feasible under Swiss law.

“Project Helvetia looks toward a future in which more financial assets are tokenised and financial infrastructures run on DLT. International regulatory standards suggest that operators of systemically important infrastructures should settle obligations in central bank money whenever practical and available. While none of the existing DLT-based platforms are systemic yet, they may become so in the future. Moreover, central banks may need to extend monetary policy implementation to tokenised asset markets”.

India’s crackdown on commodity derivatives criticised

India’s recent move to suspend trade in futures and options contracts of several agricultural commodities, which It says is in response to rising food prices, has been attacked.

Last month, market regulator the Securities and Exchange Board of India (SEBI) ordered the suspension of trade in futures and options contracts of selected agricultural commodities, including paddy (non-basmati), wheat, chana, mustard seeds and its derivatives, soya bean and its derivatives, crude palm oil and moong. The suspension took immediate effect and the directions are applicable for one year.

SEBI has justified the move as an attempt to cap price increases in essential commodities. However, it has met with criticism and warnings that it will adversely impact market confidence and make hedging more difficult.

“In the absence of a futures market, [Indian] farmers will be forced to sell their produce in the cash market at the prevailing price, which may be lower than their expected price,” writes AAmarender Reddy of the Indian Council of Agricultural Research (ICAR) on the Firstpost.com website. “Futures trading, if widely used by the farmers for hedging their price risk, can act as an effective instrument for alleviating price risk and act as a price insurance mechanism”.

SEBI's crackdown “poses two basic questions”: What is the role of derivatives trading in inflation? And what are the implications of such sudden suspension on commodity derivatives markets?

Reddy notes that the while the Indian commodity futures market has an extensive history that dates back to the establishment of the Bombay Cotton exchange in 1875, it is prone to frequent ban in agricultural commodities. As a result, the development and outreach of commodity futures market is still nascent particularly in case of agricultural commodities with little development of basic infrastructure such as warehousing, assaying and quality testing.

Unilever’s ethical stance under fire

Consumer packaged goods (CPG) giant Unilever has been criticised by a UK fund manager, who suggests that recent share price weakness is because the group focuses too much on “publicity displaying sustainability credentials” and as a result has “lost the plot.”

Terry Smith, founder of fund manager Fundsmith Equity Fund, cited examples including Unilever's refusal to supply Ben & Jerry’s ice cream in the West Bank, the Palestinian territory occupied by Israel. He also attacked Unilever’s anti- food waste campaign in the UK for its Hellmann’s mayonnaise brand “Cook Clever, Waste Less”.

In a letter to investors, Smith wrote: “A company which feels it has to define the purpose of Hellmann’s mayonnaise has in our view clearly lost the plot. The Hellmann’s brand has existed since 1913 so we would guess that by now consumers have figured out its purpose (spoiler alert — salads and sandwiches).”

He argues that Unilever should be “focusing on the fundamentals of the business,” although the letter concludes by conceding that the group’s “strong brands and distribution will triumph in the end.”

Fundsmith owns around £888 million (US$1.2 billion) of Unilever stock and is a top 10 shareholder in the UK multinational. The group was one of Fundsmith's bottom five performers, a list that also included PayPal and Brown-Forman.

Unilever is one of the world’s largest advertisers and spends €7.1 billion (£6.1 billion, US$8.3 billion) annually on brand marketing investment, according to its annual financial report.

Daily Mail columnist Ruth Sunderland comments that Smith and other investors might be less concerned by Unilever’s “woke manifesto” if it was accompanied by a good financial return.

“Unfortunately, this has recently been far from the case as Unilever shares have fallen nearly 10% in the past 12 months,” she adds. “Admittedly, it has had to contend with the pandemic and inflation in the cost of raw materials, but the FTSE 100 giant still compares poorly with its peers.

“Shares in US rival Procter & Gamble have risen more than 15% in the same period and by more than 20% at the Swiss multinational Nestlé”.

Ian Whittaker, founder and managing director of Liberty Sky Advisors, suggested that Smith's comments were sparked by "frustration, there’s no doubt about it."

He continued: “But he [does put] that it's just a case of management not focusing on the right things. This is not him at the moment pushing for management change, but it is making a suggestion to them that maybe they ought to concentrate more on the bottom line. Even if you get 5% of your customers who are essentially annoyed at what is going on, then that has an impact.”

PGIM adds to Emerging Market Debt suite

Prudential Financial’s US$1.5 trillion global investment management business. PGIM has added a sixth fund to its emerging market debt (EMD) Undertakings for the Collective Investment in Transferable Securities (UCITS) suite – the PGIM Emerging Market Hard Currency Debt ESG Fund.

The new fund is managed by PGIM Fixed Income – one of the world’s largest fixed income managers, with US$964 billion in assets under management – and “builds upon the group’s existing Emerging Market Hard Currency Debt strategy, with the addition of an integrated ESG framework”.

PGIM Fixed Income says that it expects the long-term trajectories of emerging market governments and issuers to be greatly influenced by responses to numerous ESG issues, such as climate change or governance practices.

The newly launched fund is the eighth dedicated ESG UCITS strategy offered by PGIM to non-US investors, with each fund classified as Article 8 under the Sustainable Finance Disclosure Regulation (SFDR). Most recently, the group launched PGIM Strategic Income ESG Fund – described as a flexible, ESG-integrated multi-sector bond strategy, with a focus both on income generation and capital appreciation.

The PGIM Emerging Market Hard Currency Debt ESG Fund is run by a portfolio management team led by senior portfolio managers Cathy Hepworth and Mariusz Banasiak, who “will leverage the depth and breadth of PGIM Fixed Income’s US$72 billion emerging market debt platform.

“The portfolio managers seek to construct a diversified portfolio of appealing hard currency opportunities – across sovereign, quasi-sovereign and corporate bonds. The team employs a rigorous risk-monitoring process at all levels – across industry, issuer, credit quality and liquidity profile – seeking to ensure that the performance achieved is appropriate for the risk taken”.

The PGIM Emerging Market Hard Currency Debt ESG Fund is a sub-fund of the Irish-domiciled UCITS fund umbrella, PGIM Funds plc, and will be registered for sale in the UK and various European jurisdictions.

Checkout.com hits US$40bn valuation

London-based online payments company Checkout.com has become the UK’s most valuable private fintech business after its latest fundraising round valued it at £29 billion (US$40 billion).

The company, which simplifies payment processes for businesses such as Netflix, Pizza Hut and Sony – as well as other fintechs such as Klarna and Revolut – has surpassed Revolut as the UK’s highest valued tech start-up after securing US$1 billion in funding from international investors. It puts the stake of its chief executive, Guillaume Pousaz at around US$20 billion.

Pousaz dropped out of university in Switzerland and moved to California to pursue his love of surfing in 2005 after his father died. However, he took a job at processing company International Payment Consultants after he ran out of money. Pousaz subsequently bought a small payments company based in Mauritius and set up Checkout.com in London in 2012, saying he chose the UK capital because regulator the Financial Conduct Authority (FCA) was receptive to financial technology firms.

Checkout.com processes a rapidly growing number of payments. Volumes have tripled over each of the past three years due to the rapid growth of online payments since the onset of the Covid-19 pandemic and the rise of cryptocurrencies, with Checkout.com used by many online exchanges.

It supports card payments, Apple Pay, Google Pay, PayPal, Alipay, bank transfers, SEPA direct debits and also cash payments through various local networks. In 2021 the company added the ability to issue payouts. Checkout.com customers can send money to a bank account. It also supports payouts to a card on the Mastercard or Visa network; both TikTok and MoneyGram have used Checkout.com’s payouts feature.

The company first raised investment in 2019, when it was worth US$2 billion and last year was valued at US$15 billion. It plans to use some of the funds raised to expand further into cryptocurrency technology, interest in which has soared in the past year. Checkout.com now has more than 1,700 employees across 19 offices and its recent hire of a US-based chief financial officer (CFO) has sparked reports that it might be considering a flotation in New York.

Toolstation partners with Ecospend for ‘pay-by-bank’ services

Toolstation, the multi-channel retailer of tools and building materials in the UK, France and the Netherlands, says it will become one of the largest e-commerce sites to adopt ‘pay-by-bank’ technology as a payment alternative through a partnership with open finance technology platform provider Ecospend.

A release from the fintech stated: “Ecospend’s open banking payments technology will allow Toolstation’s trade account customers to significantly improve their cash flow, while also providing flexible credit limits and making their online account management much more efficient.

“The ‘pay-by-bank’ technology will be integrated into Toolstation’s customer app and website. In doing so, trade account customers will be able to settle their account balance, without the risk of inputting the wrong details, and fraud risk will be minimised.

Payments will be made via Ecospend’s account-to-account technology, ensuring a smooth customer journey that requires no card details or any data to be imputed. Instead, customers simply select the pay-by-bank option, authenticate their identity with their biometric ID, and confirm the payment – resulting in an instant transaction.

“Toolstation’s trade account customers will also be able to pay their bills instantly via QR codes sent to them in the post. Customers just need to scan the QR code and confirm the payment, Ecospend’s ‘pay-by-bank’ technology will ensure an instant payment to Toolstation.     

“Finally, Ecospend’s ‘management console’ technology will be available to Toolstation agents, which allows them to send out payment links in bulk to anyone that needs to settle their balance. The technology can send payment links through all messaging platforms, and it will instigate an instant account-to-account payment. This was previously a manual process and through Ecospend’s open banking technology, Toolstation’s agents will be able to significantly cut down on administration time spent on debt collection”.

James Hickman, chief commercial officer at Ecospend added: “This is yet another high-profile example of the benefits that open banking payment technology can bring to big businesses and their customers”.