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Søren Skou and Jan Dieleman stress urgent need for a carbon tax

The World Economic Forum held a high-level debate on shipping’s decarbonisation yesterday featuring Soren Skou, CEO of AP Moller Maersk, Ley Hoon Quah, CEO, Maritime and Port Authority of Singapore (MPA) and Jan Dieleman, head of ocean transportation at Cargill, among others.

During the hour-long webinar, Maersk’s Skou revealed that the world’s largest liner has now contracted a yard to build a ship running on a green fuel.

Maersk officials have yet to reveal which yard is building the ship. In February, the Danish carrier said it would order a methanol-fuelled 2,000 teu feeder vessel this year to begin operating in 2023.

We are beyond the chicken and egg situation in our case as we have ordered our first ship that will run on a green fuel

“We are beyond the chicken and egg situation in our case as we have ordered our first ship that will run on a green fuel and we have said that every ship we order from now on will be capable of running on a green fuel,” Skou said during the online conference.

The debate at the World Economic Forum yesterday centred around regulatory demands to drive shipping down a green path.

“Today business is ahead of governments on this agenda. We need more sense of urgency frankly,” Skou said, demanding regulation that can start to ensure shipping has proper availability of green fuels.

“IMO, in our view, needs to deliver a market-based measure by 2025 that can be implemented in the second half of this decade,” Skou stressed, adding: “It needs to be at a reasonable level that actually tries to level the playing field between much more expensive green fuels and fossil fuels but it also has to very, very importantly include all greenhouse gases and it has to consider the full lifecycle of the fuel.”

Skou mentioned Maersk’s ongoing studies into the technical aspects of running ships on green ammonia and green methanol, saying “I am actually confident now having worked this agenda for two and a half years that we will solve the technical problems.” He said the next stage is figuring out how to make the green fuels available.

Skou said Maersk’s thinking on offering decarbonisation solutions to clients was not a capex, but a business opportunity. He said demand for Maersk’s new biofuel service was growing “exponentially” because clients are putting their money where their mouth is in terms of getting their supply chains green.

On the topic of a carbon tax, Skou said shipping had a huge advantage in that it is globally regulated by the IMO.

“We can create regulations that create a global level playing field,” he said, saying that for Maersk the question of which future fuels would work best has already been decided.

“It is going to be some combination of methanol and ammonia and it is going to be more expensive and therefore a carbon tax is starting to make sense for us,” Skou said.

Cargill’s Dieleman said shipping needed to keep focusing on efficiencies, pointing out how his company, one of the world’s largest charterers, has been involved with wind, which helps reduce the green premium.

On future fuels, Dieleman said it was vital regulators stepped in to close the price gap with existing bunker fuel.
“If you really want to scale it then you will need to come back to policy where putting a price on carbon and levelling the playing field between those fuels is absolutely needed to really make the next step,” Dieleman said, adding: “The private sector is clearly doing its bit and now it’s up to IMO and governments to weigh in.”

Dieleman said that while a global carbon tax scheme would be ideal, the difficulty of getting it in place soon would likely see regional schemes enter into force earlier.

“If a global scheme is going to take too long, the industry will need to live with some intermediate steps because we need to get going on this topic,” Dieleman said.

Singapore port boss Ley told participants that all port authorities around the world are preparing for a multi-fuel transition.

“The key is about scaling up, once you have the technology financing needs to come in in a bigger way,” Ley said, comparing the situation to how solar panels have plummeted in price over the past decade as they’ve become more and more popular.

In concluding, Maersk’s Skou called for higher ambitions in the IMO in the form of a market-based measure that includes all greenhouse gases, not just CO2.

“I’m saying that because I am worried about the narrative around LNG,” Skou said.

Maersk, unlike most global liners, has eschewed ordering any LNG-fuelled ships.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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