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October 8, 2018

TO: Steve Metruck and Port of Seattle Commissioners

FROM: David McFadden, Stephanie Jones Stebbins, Kenny Lyles and Eric Ffitch

Norway/Netherlands Maritime Innovation Trip Report

Last month six Port executives joined maritime industry leaders and Washington Department of

Commerce staff to visit Norway on a fact finding trip to learn more about maritime innovation

initiatives. Norway is the world’s Silicon Valley for ocean industries.

Trip Participants

Steve Metruck, Port of Seattle

Fred Felleman, Port of Seattle

David McFadden, Port of Seattle

Stephanie Jones Stebbins, Port of

Seattle

Kenny Lyles, Port of Seattle

Eric Ffitch, Port of Seattle

Joshua Berger, Maritime Sector

Lead – WA Dept. of Commerce

Brian Bonlender, WA Dept. of

Commerce

Chris Green, WA Dept. of Commerce

Justin Van Emmerik, Vigor

Josh Pruzek, Vigor

Will Ayers, Elliot Bay Design Group

Erik Larsen, Rolls Royce

Jennifer States, DNV-GL

Dan Smith, Crowley

Cosmo King, IO Currents

Initially the group was hosted by Innovate Norway, a government agency dedicated to advance

opportunities in blue economy, clean energy, ocean space, smart cities, art and culture. After several

days in Norway, the Port team traveled onto Rotterdam to visit the Port there and its maritime

innovation center.

The trip was invaluable and provided several takeaways that can support Washington’s maritime

industries as well as Port operations:

 Norway’s leadership in maritime clean technologies (ex. Batteries) offer clear examples of

systems that can power Washington’s next generation of ferries and harbor vessels.

 Batteries could also work to support Port operations. The maritime division is exploring how

barges or other vessels could provide charging support or shore based power to Port customers.

 Innovation centers in Wilhelmsen and RDM Rotterdam provide useful models for a Port

maritime innovation center. Wilhelmsen is starting internal ventures and investing in new

relevant start-ups as it works to digitize the traditional maritime industry. The company is

willing to provide technical expertise to the Port’s initiative. RDM is operated by the technical

university and demonstrates how workforce development can play a central role within

innovation centers.

 Port XL is a maritime accelerator supported by the Port of Rotterdam and private industry. It is

expanding its efforts, looking to open a US office, and may be a good partner to work with on

maritime incubation/acceleration initiatives.

Item No. 7C attachment 2

Meeting Date: January 8, 2019

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Norwegian Maritime Industry

 89,000 Employees

 $52 Billion Revenues/Year

 23% of Norwegian exports

 5

largest fleet in value

 Port staff visited a renewable fuels facility within the Port of Rotterdam and also visited Port

leaders to discuss sustainability efforts. The Port of Rotterdam invited the Port of Seattle to join

the World Ports Climate Action Program.

 There is significant funding coming from public and private sector players, both in Norway and in

the Netherlands. In Norway, the level of investment is aided by the long-flourishing fossil fuel

sector, which is now turning its efforts toward developing clean energy resources. In both

countries, the Paris Accord was discussed as a settled matter giving industries no choice but to

turn their attention away from fossil energy sources. Public governments are assisting this

transition by matching private sector investmentswith public funds, as both government and

industry accept the reality of transitioning away from fossil fuels over the long term.

Norway Highlights

Norway is the fifth largest shipping nation in the world and a

global maritime leader. The country is especially out front when

it comes to sustainable maritime technology. Of the first 50 LNG

propelled vessels ever built, 95 % were Norwegian. AMPER, the

world’s first electrical car and passenger ferry powered by

batteries entered into service in early 2015 in Sognefjorden,

Norway. The ferry carries 120 cars and 360 passengers, but only

uses 150 kWh per route, which corresponds to three days use of electricity in a standard Norwegian

household. Both are examples of the ability and willingness in the Norwegian maritime industry and the

government to innovate for a better future.

Driving Norwegian Innovation

Innovate Norway is a 51% State and 49% County owned government agency with 34 offices around the

world. Innovate Norway uses a combination of funding and technical expertise to drive innovation in

key clusters (blue economy, clean energy, ocean space, smart cities, art & culture). The agency’s

environmental grants and innovation contracts facilitate technological and entrepreneurial advances.

Maritime Cleantech Cluster

 Innovate Norway provides funding and technical advice to clusters across the country

 Maritime cleantech cluster formed in 2011 – probably the most advanced cluster in Norway

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o 74 employees including innovation project managers, a project coordinator, EV advisor,

communications and CEO

o 90 partners across many sectors, companies large and small, public and education

 Participating companies pay for benefits of cluster services/resources

 Competing companies cooperate on innovation, new products, R&D, big projects (hydrogen

ferry)

 Katapult - government funded research center, projects focused on ocean innovation center,

digital and sustainable energy, etc. Katapults help drive innovation faster and often spur new

ventures. Kind of an Air BNB model where partners make their equipment available in return

for government capital

 Idea – concepts – prototype – scale very helpful for small innovative companies needing

equipment or access to technology to test/validate new products

Ferry Innovation

Norway’s ferries cover 130 routes and carry 21

MM vehicles per year. The ferries are private

and operate under government contracts. The

State’s procurement policies drive safety,

zero/low emission, and long term development

of clean technologies (LNG (21 ferries) Battery

(70-80 ferries) Hydrogen (coming)).

The group visited with Wescon Green Solutions,

Servogear, Wartsilla, Kongsburg, Corvus, and

several other companies who are part of the

maritime clean tech cluster. These companies have all been collaborating to develop clean technologies

for ferries and other maritime applications. Many of these companies export their products and

services – maritime is one of Norway’s top traded sectors. Visits with these firms and tours of Norway’s

electric ferries provided inspiration to Washington State’s ferry designers on the trip.

Autonomous Vessels

Kongsberg Maritime is developing the first 100% fully

autonomous container ship. The goal of Autonomy is to

improve safety and energy conservation. Skill shortages

in the maritime industry are also driving autonomy.

Expect usage of unmanned vessels to increase to 50%

by 2050. There will still be a need for people at sea!

Wilhelmsen Innovation Center

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 Created center to advance digital innovation efforts, company working to increase pace of

digitization across maritime industry

 Company just starting this digital venture

o Starting internal ventures and investing in new relevant start ups

o Ex – Doolittle founded by former Microsoft employee, Arif Sharique helping bring

software/coding to maritime. In house development becoming more popular but

companies face challenge of hiring coders/IT help.

 Wilhelmsen applying digital to traditional lines of business

o use a lean startup model, evaluate and scale promising ideas quickly

o ex. Introducing product tracking like Amazon

o ex. Automated boiler water maintenance helps reduce risk of boiler failure

o ex. Digital mooring ropes with sensors inside the rope

o ex. Software identifies and tracks needed ship repairs

Other Highlights from Norway

 Norway advancing Green global shipping initiative (Narve Mjos)

 Port is Norway are also developing Port Index which establishes priorities for vessels based on

their commitment to sustainable practices (ex. Cruise)

 Uses Green Loans to fund companies for investments in pollution prevention, green

technologies, etc. A type of incentive financing program.

 Maritime energy transition outlook to 2050

o Mapping emissions for the Norwegian fleet

o 10% of ship emit 50% (they are the biggest ships)

o Seaborne transport projected to grow 37% by 2050

o Electrification of maritime transport and energy infrastructure a big priority

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Renewable Fuel Facilities and Markets

On Thursday September 20

the Port team flew from Bergen to Amsterdam to learn more about

sustainable aviation and maritime biofuels. We met with Paul Paoletta and Lana Marter with Neste.

The company provides a variety of sustainably based fuels and products to the aviation industry – with

refining plants in Rotterdam, Finland and Singapore. We discussed the potential application to the

Maritime Industry, as this is one of few technologies that will feasibly decarbonize ocean going vessels.

During our conversations we learned that:

 Sustainable fuels are 4x as expensive vs traditional fuels at this point in time, parity will take a

long time

 CA uses RINS, tax credits, LCFS, etc. to drive price parity

 Neste started renewable fuel sales efforts with private sector and company now working to get

local/state governments on board

o Economics favor diesel

o Airlines want cost parity with current fuels

o Special financing tools needed to scale use of sustainable fuels (ex. private co. off take

agreements)

 Feds (specifically military) can help demand although there’s no momentum (or lost

momentum) during the current administration

 Aviation has no alternatives (electric) so they should get priority for available biofuels. This

would also be the case for Ocean Going Vessels.

 Currently certain feedstocks are deemed sustainable others are not. Neste indicates that we

need to change this recognizing that regions have unique feedstock opportunities

o Feedstocks – garbage, crops, dairy waste

About Neste.

Neste is a publicly traded company on the Finnish stock exchange (fact check) The company has 5,000

employees and generates $16.2 B revenues/year. Within the renewable fuels industry the company has

advantage of size/scale being a publicly traded company with a strong balance sheet. Most of their

current competitors are much smaller. Neste keeping eye on emerging partnerships with larger oil

companies (Shell & SKYNRG). The company

 Is an industry leader in processing dirty oils/ greases

 Produces low sulfur bunker fuel

 Produces 880M/year of renewable diesel

 Jet fuel is 50% of company sales

 Neste MY, branded renewable diesel being sold in CA

 Renewable diesel is not biodiesel - it is a colorless, odorless, high performance fuel

 Neste has 3 low sulfur fuels made in Finland

o Their renewable diesel all goes to the Scandinavian countries

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Neste Rotterdam Plant Visit

Safety First!

 170 employees - 1M tons of diesel per year (2,000,000 barrels)

 620 mm Euros plant investments – plant started in 2012

 Port of Rotterdam recruited Neste (or encouraged them, as part of search for renewable

companies)

 They use 15 different feedstocks and several different products to satisfy various local

regulations (ex. no palm oil)

 Big customers are diesel manufacturers who need biodiesel to meet renewable regulations

 Plant in Singapore serves US - they met a time sensitive requirement that allows Singapore to be

RIN eligible

Features/Benefits

 No sulfur, O2 or anomalies, a high quality fuel

o Smaller environmental footprint

o Lower operating costs

o Superior cold weather performance

o Long shelf life

o Easy switch, works in vehicles without need for conversion of equipment

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Port of Rotterdam & Maritime Innovation

On Friday the Port team visited Port of Rotterdam headquarters to rekindle a long term relationship

between sister ports. Our group met with Alan Dirks, one of the Port’s environmental managers. He

provided a good overview of Port operations:

 Port operations span 60km – Shell is huge customer spanning 24km along the river

 An “oil” port - they have 40 employees working to diversify beyond oil

 Cargo logistics 45% rail 30% truck

 The Port supports over 150,000 employees yet its industries have a poor reputation as work

places. It is seen as a dirty “old” place to work

 The Port invests in Port XL, a maritime business accelerator that holds a competition once a year

for top maritime ventures.

 We discussed the recently announced World Ports Climate Action Program, a groundbreaking

agreement spearheaded by the Port of Rotterdam and announced earlier in September.

RDM Rotterdam

After visiting the Port of Rotterdam, the team took a thrilling water taxi ride to RDM Rotterdam.

Originally RDM was a shipyard started in 1902. The company built vessels for Holland America

(including SS Rotterdam). The facility went down slowly in early 2000, and the port bought it in 2002

because the place was becoming blighted. The Port reached out to the local technical university to

operate center and then took seven years to redevelop the facility.

RDM Rotterdam campus

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“The challenging times in all port

related markets, like logistics, oil and

gas, and maritime, require that we

have a window on new technologies.

PortXL helped us identify these trends,

bringing new business models to our

markets and challenging conventional

businesses.”

Paul Smits

CFO, Port of Rotterdam

Dr Hans Maas, Dean of RDM Rotterdam hosted our visit and shared other highlights. RDM is part of

Rotterdam University of Applied Science Education – 38,000 students spaced all over the city:

 RDM pulls university talent from across the city around specific projects (they have no

permanent faculty at RDM)

 University requires student thesis so be in conjunction with a private company

 Practical experience embedded throughout 4 year program

 Shared facilities – fab lab and Field/test labs

 Almost all universities are public and every university costs the same ($200 Euros/year)

 Port wanted to get next generation interested in the Harbor (why RDM)

 Get them ready for “Port of the Future”

 Port owns facility and doesn’t charge for common spaces

o Goal – gets kids into maritime jobs with the skills needed for success (ex. train in IT for

maritime employers)

 RDM/Port hosts events for kids of all ages starting with kids (8-18) in elementary

 Learning space at RDM…tenants must want to work with students

 At first entrepreneur’s didn’t come (in part due to recession), but situation has improved

 RDM expanding across the river (Port XL location)

 Creating a “Makers” district out of rougher older parts of port

 Smart Port: The Value added for Port of Rotterdam – innovation and trained people

Port XL

After visiting RDM the Port team visited Port XL, a

maritime business accelerator supported by private

industry and the Port of Rotterdam. Port XL is global –

they have 11 employees with two in Antwerp, five in

Singapore, and 4 in Rotterdam. The Port XL office

provides bullpen spaces for their startups.

Port XL scans the world each year scouting for promising

maritime startups. In the months leading up to their

annual acceleration initiative staff will do research on

hundreds of emerging firms targeting those with most

potential in the maritime industry. Port XL uses private sector sponsors to screen the most promising

firms down to 20-25 startups who participate in their “Selection Day” evaluation process where 10-15

companies are selected for the accelerator program.

Selected startups then go through an intensive 3-month program to build and launch their business. At

a final event called Shakedown, startups showcase their innovations and progress. Highlights include:

 Startups must provide 8% stock or $150,000 Euro (but XL hasn’t gotten any hard funds yet)

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 14 Corporate sponsors put in $50,000 with gold sponsors paying more – they effectively pay for

everything

o Port of Rotterdam sponsors Port XL to identify firms and technologies they need

 XL staff makes cut from 1000 suspects to 200 promising ventures before they bring the sponsors

in to evaluate these enterprises and further reduce the field to 20-25 candidate firms

 Participating startups get contract with one of our sponsors (provides early cashflow)

 Port XL has facilitated 84 contracts on behalf of 36 accelerator clients.

 Satellite office offer shorter one week programs designed to feel participants into Port XL’s

annual accelerator.

 Rotterdam is ultimately gaining brand recognition for innovation

Next Steps

The Port of Seattle delegation benefited tremendously from the lessons learned on this trip. The team

will be advancing maritime innovation across the Port in a number of ways:

 Staff is exploring whether battery powered vessels could provide charging support or shore

based power to Port customers.

 Innovation centers in Wilhelmsen and RDM Rotterdam provide useful models for a Port

maritime innovation center. Staff needs to determine how these models apply to our own

initiative but it is invaluable to see what other companies and Port districts are doing to advance

maritime innovation. Being able to collaborate with existing partners in this arena can help

ensure Port of Seattle initiatives are practical and effective.

 Port XL offers a partnership opportunity as they are looking to expand their United States

presence. Staff will be following up with Port XL to explore partnership opportunities. We have

discovered two Seattle based maritime companies who have participated in Port XL so this is a

worthwhile partnership to explore even if we only emulate certain aspects of their program.

 The Port of Rotterdam shared information the World Ports Climate Action Program. Our Energy

Goals are our programs are aligned with this program and we see potential benefits with

aligning our actions with these other Ports. The initiative is recently announced and it is not

clear yet how additional Ports can join. We are investigating.

 Other visits to Alta Sea in Los Angeles and the Coast Guard’s Science and Technology Innovation

Center in New London, Connecticut are also anticipated. These fact finding trips will enable Port

leaders to forge productive relationships with other maritime innovators and to learn about best

practices (and additional lessons learned) that can drive the Port’s maritime innovation center.