The shipping industry faces a long road to green transformation, especially as sustainable fuels are in short supply and high in price. Maersk, the industry leader, suggests addressing regulatory issues. In addition to calling on the US government to expand the scope of the Inflation Reduction Act (IRA), it also supports the adoption of a "Green Balance Mechanism" to narrow the cost gap between fossil fuels and green fuels.
Maersk CEO urges US to increase incentives amid shortage of low-carbon fuels
Maersk recently achieved a shipping industry first by using low-carbon methanol fuel on a voyage from China to the Port of Los Angeles. However, because the required fuel could not be purchased in the United States, the return trip had to use traditional fossil fuels, which Maersk CEO Vincent Clerc could not help but lament.
Ke Wensheng bluntly stated at a ship naming event on August 27 that if decarbonization is to be achieved at the speed set by scientists and politicians from various countries, the shipping industry, which accounts for 3% of global carbon emissions, needs more and cheaper green fuels, and therefore needs the assistance of the government and regulatory agencies.
He stated that Maersk has proposed to the Biden administration that green shipping fuels receive tax breaks or subsidies through the Federal Reserve's Inflation Reduction Act, similar to the trucking and aviation industries. Beyond the United States, Ko Wensheng published an article in July 2024 arguing that Europe should also implement a similar action plan to avoid lagging behind in the renewable energy transition.
Maersk supports Green Balance Mechanism to narrow fuel cost gap
Maersk, along with its peers CMA CGM, Hapag-Lloyd, and the World Shipping Council (WSC), has proposed a "Green Balancing Mechanism." This would involve charging a fee based on a ship's fossil fuel consumption and distributing the fee to ships using green fuels, thereby lowering the barrier to entry for green transition. According to the WSC, green fuel costs three to four times as much as fossil fuels.
Ke Wensheng said, "We have proven from an engineering perspective that the shipping industry can decarbonize. But this is how the market works. From an economic perspective, if there are no incentives and no actual carbon reduction actions, it will be difficult for consumers and customers to make the right choice."
In order to achieve net zero by 2050, the United Nations International Maritime Organization (IMO) will develop a new regulatory framework. The latest meeting is scheduled for the end of September this year, and will discuss issues such as incentives for net zero transition and reducing the carbon emission intensity standards of shipping fuels.
*This article is reprinted with permission from RECCESSARY. The original title is "Sustainable shipping fuel is scarce and expensive, costing three times as much as fossil fuel! Maersk: Net zero requires government support." By Lin Boyu. CC license terms are not applicable.
