We sat down (digitally) with Tessa Major, Director International Business & Innovation at Porto do Açu, the Brazilian private landlord port located on the northern coast of Rio de Janeiro state. The Belgian executive moved to Brazil after her former employer – the Port of Antwerp – signed an investment and cooperation agreement with Porto do Açu in 2018. She started out as Commercial Director and moved to the current position in early 2020.
During 1Q2021, Porto do Açu signed two major MoUs with Equinor and Fortescue Future Industries. The first aims at jointly evaluating the development of a 200 MWp photovoltaic solar generation plant in the port’s area during a period of 12 months (started on December 2020). The second covers studies on the feasibility of installing a 300 MW green hydrogen plant in the port, with the potential for 250,000 metric tons of green ammonia exports per year.
Mrs. Major stresses that the agreements are part of a much broader plan branded “Açu Green Port”. The concept shifts long-term priorities towards low carbon business, with a special focus on the green (zero-emission) hydrogen economy.
However, the company is evaluating “blue hydrogen and different colors of hydrogen”, which may include natural gas as input, with or without carbon capture. The “rainbow hydrogen” pragmatic approach is coherent with a port still heavily dependent on oil and gas businesses. Yet, the initiative places Porto do Açu among the leaders in Latin America’s ongoing alternative fuel transition.
Maritime South: We have seen some of Porto do Açu’s main clients and partners putting forward carbon neutrality commitments. Some more ambitious than others. For BP, it’s 2050, for Anglo American, 2040. But for Fortescue, it’s 2030, just around the corner. The same company that just signed a MoU with Porto do Açu. Are you also considering a similar net-zero target?
Tessa Major: We are a port environment where industrial development is possible and it can go hand in hand with this concept of future business and the growth of Brazil, so we are not only the gateway for oil and gas towards Campos and Santos Basins, we are not only the gateway to the Southeast region, but we are also the gateway to sustainable business of the future.
The port as a whole has been developed in three waves, where you have our nucleus of activities. First, the oil and gas and the more standardized port business, obviously the idea is to expand that. The second wave, which we really want to leverage, is the commodities that we already have available in the port as enablers for industrialization. Oil, iron ore, gas and renewable energy. The third wave is looking to the business of the future, low carbon and sustainable business.
Energy transition: “no re-engineering”
However, we see this incremental growth of sustainability, incremental growth of development of a port and industrialization, but we also see the potential for leapfrogging and making a huge jump forward, and the best example of that is Fortescue. There are some industries that want to tackle sustainability slowly but surely, and you have companies like Fortescue that are very ambitious and they go for a big change in one step. As you mentioned, they committed to being net zero by 2030, so it shows their ambition, and this is absolutely possible in Porto do Açu.
We don’t want to be a port that 5 years, 10 years, 20 years from now has to do this “transition”, or “reengineering”. I come from port business, I’ve been working in the maritime sector for 15 years, and I know that a lot of ports globally are working on sustainability, but like, 95% of them are talking about reengineering and transitioning. Because they have already grown in a certain direction. For us at Açu, you can be as sustainable as possible from the beginning all the way up until the end of the value chain.
The reason why Fortescue wanted to join hands with Porto do Açu is not only because of our potential access to renewable energy and the developments of renewable energy that are already ongoing. It is also because of the size of the industrial area, so there is room to develop and grow. We are a port and that has a potential to facilitate the export of the green ammonia as an energy carrier as well as potentially use this green ammonia in our own port as part of industrialization projects.
We still have a large undeveloped area, part of our industrial area. This is the challenge, to also populate the industrial area, and this is really where the Açu Green Port sustainable business strategy comes into play.
What is the Açu Green Port?
The Açu Green Port connects sustainable business and sustainable industrialization with port development. We are bringing three key elements together. First, the sustainable energy to start with and the transition of energy through the availability of gas and then later the hydrogen as an energy vector. Second, the industry of the future looking into low carbon, circular economy, bio-based chemicals, carbon capture and storage, etc. Third, the sustainable fuels as well, with the implementation of the Environmental Ship Index (ESI) and a mix of alternative fuels for the shipping and logistics businesses.
This means the Equinor and Fortescue MoUs are part of a broader plan. How long has such plan been under development?
Within the company, sustainability has been top-of-mind for many, many years, basically since the birth of the port. And not just for Porto do Açu, but also the shareholders of Porto do Açu being Prumo and the Port of Antwerp, and then the shareholders of Prumo being EIG and Mubadala. So ESG is really part of our DNA. We have added now the sustainable business pillars. This has been under development for quite some time, because in sustainability you always need to balance the economic value with the sustainability value. But it is indeed, as you mention, part of a larger plan.
So, what we are doing now is focusing on 5 specific value chains: the renewable energy, the green hydrogen, the green chemicals (in part enabled by the rainbow hydrogen), the green steel, and the sustainable fuel mix.
Fertilizers and steel: “we have business cases that are quasi-ready to go to market”
We have significant movements in all 5 value chains, being the MoU in place with Equinor in the case of renewables, Fortescue in the case of hydrogen, as we have business cases that are quasi-ready to go to market in the case of chemicals (which will be the fertilizers), in the case of steel (which will be the pallets), and we already have the cabotage in place with Norsul when it comes to sustainable logistics.
How would those value chains interact in the port?
We are bringing different value chains together that have a level of synergy and a level of interconnection.
We start with renewable energy and the availability of renewable energy within the port and near the port. It’s not the idea that the entire industrial area will be populated by renewable energy. It is the idea that within the energy mix of Porto do Açu, you should be able to use oil and gas electricity and renewable energy. We like leading by example, so that’s why we have a project specifically on the development of renewable energy and this is the partnership that we have with Equinor for solar.
And then on the second stage, coming out of the renewable energy you would have the green hydrogen. And this is the MoU and the partnership that we now have in place with Fortescue. So really producing green hydrogen out of the renewable energy and transforming it into green ammonia. Green ammonia can be used for exportation, really making renewable energy a global energy commodity, or you can use it as a base product for the chemical industry.
The green hydrogen also enables in part the green steel. What we see within Porto do Açu is the possibility for the full green steel value chain to develop within the port. So, within the steel industry, there are two production chains.
“We do believe that there is room for rainbow hydrogen”
One is based on blast furnace system, which is the old school one. Then you have the new production value chain, which is based on the electric arc furnace. The electric arc furnace is about 15% more CO2-efficient than the blast furnace. As base products for this electric arc furnace process, you would need pallets and HBI. And we have this value chain already being developed in Porto do Açu as well.
We can also have further development of additional renewable energy, being it offshore or in the hinterland. And obviously that enables the hydrogen as well. The offshore logistics we have in place, the potential for importation for instance of wind blades, we’ve done this before through our multipurpose terminal.
The green hydrogen is absolutely the ambition and the goal of the partnership with Fortescue. So that is really the primary target. However, looking forward within Porto do Açu and the different industries that are possible, we do believe that there is room for rainbow hydrogen, so also for the blue hydrogen and for different colors of hydrogen understanding that it enables a more sustainable logistics as a fuel, and it enables a more sustainable chemical process and industrialization. So, within the port there will be a combination, but the focus that we have now with Fortescue is the green hydrogen.
Green MoUs: “We want to get to FID yet this year”
Do you have a timeline regarding how these MoUs would eventually evolve into Firm Investment Decisions (FID)? In addition, you have 2 MoUs in place for 2 of the 5 value chains projected, but for the other 3, nothing has been announced yet. Do you also have a timeline for that?
Well, when it comes to the timeline of Equinor and Fortescue, it’s very similar. We want to get to FID yet this year. This is ambitious but possible because of the partners that we are with. For instance, for Fortescue, they have a very similar project ongoing now in Tasmania which they can draw a lot of information from in terms of technical designs and things like that, that allow us to speed up trajectory, so the target there is FID by the end of the year. When it comes to the other projects, I would say, keep tracking Porto do Açu, because I think you’ll see some movements in there.
Are your clients pushing for decarbonization, or do you feel like there is also the responsibility of Porto do Açu lead in the transition? Are you also seeing the demand already?
I think part of your question you should actually ask our clients. Many, many companies nowadays have sustainable strategies and a vision connected to low carbon or connected to alternative fuels, depending on what type of company. What we believe we have in Açu, which is the uniqueness of Açu is basically a platform for sustainability. We bring different elements that are important within sustainability. Being it the renewable energy, being it Caruará [RPPN nature conservation area within the port limits], being it the green-based products, etc. So, this is where Porto do Açu really shines.
“We are a sandbox of opportunities for sustainable businesses. To what extent and how far and industrial player or a terminal operator wants to take that, this is in part their decision and in part regulatory pressure, let’s be honest”
We are a sandbox of opportunities for sustainable businesses. To what extent and how far and industrial player or a terminal operator wants to take that, this is in part their decision and in part regulatory pressure, let’s be honest. In reality, it is their decision. All we do at Porto do Açu, because we believe it is right, is to give them the platform and give them as many parameters to play with to be as sustainable as possible from the beginning.
Why do we do this? Because we believe sustainability is important. Not just for us as a port, but also for our relationship with the community. It is one of our core values. And it’s been with us since the beginning. Now maybe it’s becoming more apparent because we are going in the direction of sustainable business. For sure, it is the end goal to have the balance between economic growth and sustainable value, really going for the core definition of shared value.
The port is 100% exposed to Brazilian risk. At least for now, it doesn’t really look like there is institutional support in the country for carbon neutral fuels. Do you see regulatory pressure building up in Brazil?
I think you need to look to the profile of Brazil as a country, as a whole, when it comes to energy production. The largest part of the energy production is renewable in Brazil. It is the top runner in terms of energy production, up to 85% of the Brazilian energy production is already renewable energy, you cannot ignore that fact. So it is true that, when you talk to an international audience, this is not the thing that they think about when they see the combination of Brazil and sustainability, but it is the reality. So I do see that there is a lot of potential in there.
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