CEOs of major shipping companies, including Maersk, CMA CGM, Hapag-Lloyd, MSC, and Wallenius Wilhelmsen, have jointly advocated for an end date to the construction of fossil-only fuelled newbuildings at COP28. The unprecedented initiative aims to accelerate the transition to green fuels, aligning with the International Maritime Organization’s (IMO) 2030, 2040, and net-zero 2050 targets for an industry responsible for 2-3% of global greenhouse gas (GHG) emissions, according to sources.
The CEOs emphasized that transitioning from fossil to green fuels at scale and pace is the only realistic way to meet IMO’s ambitious targets. Their joint declaration, issued at the COP28 summit, calls for four regulatory cornerstones:
- End Date for Fossil Fuel-Only Vessels: The CEOs urge the IMO to establish an end date for newbuildings of fossil fuel-only vessels, accompanied by a clear GHG Intensity Standard timeline to inspire confidence in investments for new ships and the necessary fuel supply infrastructure.
- GHG Pricing Mechanism: They propose an effective GHG pricing mechanism to make green fuel competitive with conventional black fuel during the transition phase. This mechanism involves distributing the premium for green fuels across all fossil fuels used, minimizing inflationary effects. Additionally, revenue generated should contribute to a research, development, and demonstration (RD&D) fund and investments in developing countries for a just transition.
- Vessel Pooling Option: The CEOs advocate for a vessel pooling option for GHG regulatory compliance, allowing the performance of a group of vessels to count collectively. This approach ensures investments yield the maximum GHG reduction, expediting decarbonization across the global fleet.
- Well-to-Wake GHG Regulatory Basis: They call for a well-to-wake or lifecycle GHG regulatory basis to align investment decisions with climate interests and mitigate the risk of stranded assets.
Rolf Habben Jansen, CEO of Hapag Lloyd, stated, “We believe that a regulatory framework and clear targets are crucial to accelerating the introduction of alternative fuels and reducing our carbon footprint.” Soren Toft, CEO of MSC, emphasized the need for government support, stating, “Among those efforts we want to see an end to delivery of ships that can only run on fossil fuels.”
While this initiative increases pressure on the IMO to strengthen decarbonization targets, the CEOs recognize the diverse interests within the consensus-based UN agency. However, they remain optimistic that regulation can play a pivotal role in mitigating the cost of the green transition, given the far greater cost of climate change. The CEOs hope to rally support from executives across various companies in this shared conviction for a sustainable and low-carbon future.
Sources: Maersk, CMA CGM, Hapag-Lloyd, MSC, Wallenius Wilhelmsen, SeaTrade Maritime News.
