Photo: Maersk Essen; Image credit: Maersk

Maersk CEO: Business is ahead of govts on decarbonization agenda

There needs to be a greater sense of urgency among global governments in relation to the adoption of policies that would accelerate decarbonization in the shipping sector, the head of the world’s largest container shipping company believes.

“Business is ahead of governments on this agenda,” Soren Skou, CEO of A.P. Moller Maersk said yesterday while speaking on a Getting to Zero for Shipping session, hosted by the World Economic Forum.

“Fossil fuels are cheap, they are easily available and very reliable, which makes them a tough competition for green fuels. Therefore, we need more regulations that can start to ensure that we have greater availability of green fuels.”

Skou believes the International Maritime Organization (IMO) needs to deliver a market-based measure by 2025, so it can be implemented in the second half of this decade.

In practice this would mean a reasonable carbon tax that would aim to create a level-playing field between fossil fuels and more expensive green fuels.

 “We are in a climate emergency and need an emergency response to decarbonize shipping. A substantial greenhouse gas price should be introduced to close the gap between new, green fuels & fossil fuels. Governments must unite at International Maritime Organization to regulate and incentivize shipowners, operators, and fuel providers, so that investments in new fuels and technology are prioritized,” he pointed out.  

However, Skou insists that when defining this measure, the IMO should consider the entire life-cycle of all greenhouse gases associated with different types of fuels. This is critical in avoiding the risk of incentivizing the use of certain fuels, whose production is associated with high methane slips or releases of other greenhouse gases. Massive implementation of such solutions on board ships would basically eradicate their benefits to the environment with the ramping up of their respective production.

As explained recently by Ingrid Andersen, Head of Decarbonisation Targets & Life Cycle Analysis & Frameworks at A.P. Moller – Maersk, it is critical that the new rules and regulations support the use of the ‘right fuels’ that have a real potential to cut GHG emissions from a ship.

This is the case with LNG, essentially methane, which on a 20-year horizon has 86 times higher global warming potential than CO2, Andersen pointed out, arguing for a more holistic approach to looking at alternative fuels. The same principle is also applicable to ammonia and hydrogen, which despite being zero-carbon fuels, need to be produced in a green manner in order to be truly sustainable which is not the case right now.

Maersk is currently working with multiple stakeholders on new fuels, including the Maritime and Port Authority of Singapore, and is quite confident it would overcome all technical challenges involving the use of green methanol and ammonia as fuel.

“The next step in this process is figuring out the way of making green fuels more available on the market,” Skou said.

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Earlier this year, Maersk revealed plans to launch the world’s first carbon-neutral liner vessel in 2023, seven years ahead of the initial 2030-ambition. The vessel will be a methanol feeder with a capacity of around 2,000 TEU and it would be deployed in one of Maersk’s intra-regional networks.

While the vessel will be able to operate on standard VLSFO, the plan is to operate it on carbon-neutral e-methanol or sustainable bio-methanol from day one.

Furthermore, container shipping major vowed to order solely dual-fuel ships in the future, which will be capable of running on a zero-carbon fuel.

Skou views the push toward zero-carbon shipping as a market opportunity rather than a challenge because there is a growing demand from the customers for such solutions and companies don’t mind paying premiums for those alternatives.