Time is running out – global emissions rules for shipping need to be reached now

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Soren Skou, Chief Executive Officer, A.P. Møller-Maersk

• The 2020s must be the decade of action if we are to solve the shipping industry’s share of the global climate challenge.
• The International Maritime Organization (IMO) has to deliver substantial progress by the end of this year to accelerate the work needed to decarbonise shipping.
• Finding the fuels of the future is a comprehensive task, though the technologies exist and, in the case of methanol, are ready to be picked up.

The 2020s must be the decade of action if we are to solve the shipping industry’s share of the global climate challenge before we reach a critical tipping point.

Transport and logistics account for a considerable part of GHG emissions globally, with shipping alone accounting for 2-3%. We, the corporate leaders, must make decisions with long-term perspectives and accelerate the transition now.

At the same time, the global community and international regulatory authorities need to move faster on the climate agenda than has been the case so far. At its MEPC76 meeting on June 10-17, the International Maritime Organization (IMO) adopted already-agreed short-term efficiency measures and agreed to start discussing market-based measures. The US has said the overall ambition of the industry should be zero emissions by 2050 rather than the current minimum goal of a 50% reduction.

At A.P. Moller – Maersk we fully agree. In 2018 we set ourselves an ambition of achieving a carbon neutral fleet by 2050. At the time we thought it to be a moonshot; now we see it as a challenging, yet achievable goal.

The price of emissions

Time is running out for the IMO. Market-based measures consisting of a greenhouse gas price should be introduced to close the competition gap between new, green fuels and fossil fuels. That way, switching to green fuels will make economic sense for the industry. We support such a CO2 price, and it must be substantial enough to achieve true price parity.

Shipping is inherently a global industry – and thus challenges and framework conditions should be addressed globally. If the IMO doesn’t reach agreement on global rules now, we are facing an inadequate patchwork of different rules in different regions. When our vessels sail from China to Europe or between China and the US, regional initiatives are challenging. However, if the IMO can’t deliver, then quotas for greenhouse gases through an Emissions Trading System in the EU might be needed to push the industry on the right track towards decarbonisation. The EU then needs to balance its role as a regional regulator with that of a leading bloc at IMO. A strong voice from the EU at UN level is needed to raise ambitions and secure the adoption of meaningful global regulations.

It is, nevertheless, encouraging to see that the decarbonisation of the shipping industry has moved up on the international political agenda. The US is calling on the IMO to step up its ambitions, shipping is part of the UK’s climate plan and Singapore is investing $90 million in a research centre for decarbonisation.

At A.P. Moller – Maersk, we urge that this momentum is translated into action and collaboration to create the right market conditions for a carbon neutral future for the industry. It is not just from the political scene that we are currently witnessing a changed conversation around the climate challenge and the urgency for action. Consumers are changing buying habits and expect that goods are not only produced but also transported with the climate in mind.

About half of our 200 largest customers – especially those that produce directly for consumers – have set ambitious and science-based targets for their emissions. These goals extend beyond their own production to their entire value chain, which means that they depend on us as their logistics company to transport their goods with as low CO2 emissions as possible. We will and must help them with that.

It is unique that we now see customers, investors and decision makers all pulling in the same direction. It confirms that carbon neutrality is a strategic imperative, not just for us, but for the entire industry. Finding the fuels of the future is a comprehensive task. The good news is that technologies exist and, in the case of for example methanol, are ready to be picked up. energy, mining, metals, blockchain

What is the World Economic Forum doing to help companies reduce carbon emissions?

Corporate leaders from the mining, metals and manufacturing industries are changing their approach to integrating climate considerations into complex supply chains.

The Forum’s Mining and Metals Blockchain Initiative, created to accelerate an industry solution for supply chain visibility and environmental, social and corporate governance (ESG) requirements, has released a unique proof of concept to trace emissions across the value chain using distributed ledger technology. Building Resilient Global Value Chains | Sustainable Deve…

Developed in collaboration with industry experts, it not only tests the technological feasibility of the solution, but also explores the complexities of the supply chain dynamics and sets requirements for future data utilization.

In doing so, the proof of concept responds to demands from stakeholders to create “mine-to-market” visibility and accountability.

The World Economic Forum’s Mining and Metals community is a high-level group of peers dedicated to ensuring the long-term sustainability of their industry and society. Read more about their work, and how to join, via our Impact Story.

Challenges but opportunities

Nevertheless, there are challenges of production scale as well as lack of a mature market. The market for new fuels is fragmented with many different projects and suppliers and a coherent infrastructure is absent.

A.P. Moller – Maersk is a frontrunner in the decarbonisation of the global shipping industry. It requires investments and major change. We consider it constant care that we adapt to the reality we see ahead, and with a sense of urgency. In 2023, we will have a ship operating on green methanol. This is seven years earlier than we first set out to do. Although this ship is groundbreaking and will be a world’s first, it goes without saying that a single ship is far from enough when you have a fleet of over 700. Therefore, we have also said that going forward we will only order vessels that can sail on sustainable fuels, be it sustainable methanol, ammonia or other types of fuels.

Although the task of decarbonising global shipping is enormous, it is clear when we look to the future that this does not just pose challenges. It also brings along opportunities that businesses, customers and decision makers must seize. As an integrated logistics and transport company, we are ready. We have embarked on a journey to create a change that we believe is both responsible and the right path for our company, our customers and not least for the planet.