The Chief Executive Officers (CEOs) of leading global shipping lines have issued a joint declaration at COP 28 calling for an end date for fossil-only powered newbuilds and urging the International Maritime Organization (IMO) to create the regulatory conditions to accelerate the transition to green fuels.
Their joint declaration calls for the establishment of four regulatory ‘cornerstones’:
An end date for building fossil fuel-only vessels and a clear GHG Intensity Standard timeline to inspire investment confidence, both for new ships and the fuel supply infrastructure needed to accelerate the energy transition.
An effective GHG pricing mechanism to make green fuel competitive with black fuel during the transition phase when both are used. This can be done by distributing the premium for the green fuels across all the fossil fuel used. With low initial volumes of green fuels any inflationary effects are minimized. The mechanism must also feature an increasing regulatory incentive to achieve deeper emission reductions. Furthermore, beyond covering the ‘green balance fee’, revenue generated by the mechanism should go to an RD&D fund and investments in developing countries to ensure a just transition that leaves no one behind.
A vessel pooling option for GHG regulatory compliance where the performance of a group of vessels could count instead of only that of individual ships, ensuring investments are made where they achieve the greatest GHG reduction and thereby accelerating decarbonization across the global fleet.
A Well-to-Wake or lifecycle GHG regulatory basis to align investment decisions with climate interests and mitigate the risk of stranded assets.
Major players in the shipping industry, including CEOs of Maersk, CMA CGM, MSC,Hapag-Lloyd, and Wallenius Wilhelmsen, expressed their shared conviction that regulation can play a key role in mitigating the cost of the green transition as well as the risk of extreme weather events. Given the cost of climate change is far greater than the cost of the green transition they look forward to being joined by other companies.
“Climate change is a general concern not a matter of competition. The CMA CGM Group is extremely pleased to join this unique Coalition, which brings together leading shipping companies to urge the adoption of the upper targets of the IMO trajectory. This sets an ambitious milestone for the decarbonization of our industry. By collaborating with others, we each take a new step in our energy transition, while ensuring a collective level playing field and access to greener fuels for the industry,” Rodolphe Saadé, Chairman and Chief Executive Officer of the CMA CGM Group, said.
This new commitment is fully in line with the CMA CGM Group’s ambition to be Net Zero by 2050. The company has already invested close to $15 billion in decarbonizing its fleet, resulting in almost 120 vessels capable of being powered by decarbonized fuels by 2028.
In 2023, the CMA CGM Group estimates that its CO2 emission reduction will be around -1 million tons.
“A.P. Moller – Maersk wants to accelerate the green transition in shipping and logistics and a crucial next step is to introduce regulatory conditions which ensure that we create the most greenhouse gas emission reductions per invested dollar. This includes an efficient pricing mechanism to close the gap between fossil and green fuels and ensuring that the green choice is easier to make for our customers and consumers globally. The momentum for green fuel is building and we are pleased to see strong partnerships across the industry as we continue our joint efforts of making decarbonization in shipping successful,” says Vincent Clerc, CEO of A.P. Moller – Maersk
“Our collective responsibility for a sustainable future and clean practices is paramount,” says Rolf Habben Jansen, CEO of Hapag Lloyd.
“We believe that a regulatory framework and clear targets are crucial to accelerating the introduction of alternative fuels and reducing our carbon footprint. This commitment is in line with Hapag-Lloyd’s goal of achieving a net-zero carbon fleet by 2045 and reflects our industry’s unwavering commitment to environmental responsibility.”
Soren Toft, CEO of MSC Mediterranean Shipping Company, said that MSC’s fleet renewal strategy includes 100 dual-fuel vessels.
“The support of Governments across the world will be an essential element to reach our common goal and among those efforts we want to see an end to delivery of ships that can only run on fossil fuels. MSC has fully supported and committed to net decarbonization by 2050 but without the full support from other stakeholders particularly energy providers it will be extremely difficult to meet those objectives – no one can do this alone. Today it feels like we are one step closer in this regard, but concrete supply of alternative fuels and globally recognised GHG pricing are essential to achieve our goals,” Toft added.
“At Wallenius Wilhelmsen we have decided to be a shaper of the journey to net-zero and focus our investments in supporting this ambition. Our customers want to partner with us on the voyage. Now, we need a global regulatory framework matching this ambition to drive the investments needed at a global scale.” says Lasse Kristoffersen, President and CEO of Wallenius Wilhelmsen.