Shipping Giants Want an End Date for Fossil Fuel-Only Vessels

By Jack Wittels and Tara Patel (Bloomberg) —

Europe’s biggest container lines want to phase out ships powered only by fossil fuels.

The proposal was announced Friday in a joint statement from Mediterranean Shipping Co., A.P. Moller-Maersk A/S, CMA CGM SA and Hapag-Lloyd AG — four of the world’s top five carriers. It was part of a wider call for action on cutting the industry’s greenhouse gas emissions, made at COP28 this week in Dubai.

“We want to see an end to delivery of ships that can only run on fossil fuels,” said Soren Toft, chief executive officer of industry leader MSC, based in Geneva. “Concrete supply of alternative fuels — and globally recognized GHG pricing — are essential.”

Shipping is a major source of carbon emissions and the industry spewed more than 1 billion tons in 2018. While the sector is making some moves toward decarbonizing, progress is relatively limited so far, with the vast majority of the world’s fleet still running on oil. Alternative marine fuels include clean forms of methanol and ammonia, as well as liquified natural gas.

CEOs of Leading Global Shipping Lines Call for Action to Accelerate Transition to Green Fuels

The companies also called for a “pricing mechanism” to make green fuel competitive during the transition, and for firms to target “one or several” of the highest levels of ambition set earlier this yea  by the International Maritime Organization, the industry’s global regulator. 

Those non-binding goals aren’t enough to prevent international shipping from exceeding its share of the world’s 1.5C carbon budget, though would keep it below 2C, the International Council on Clean Transportation, a non-profit think tank, said at the time.

Taking steps

The major carriers, having just come through a two-year stretch of record profits during the pandemic, are making more effort to show their environmental stewardship because customers are trying to reduce their carbon footprints.

Copenhagen-based Maersk has taken delivery of a vessel that can run on green methanol and has another 24 arriving through 2027, and has a target of net zero GHG emissions by 2040.

Meanwhile, CMA CGM, which has a fleet of about 600 vessels, has adjusted an order for eight ships that were to be able to run on methanol to be able to use LNG instead, Rodolphe Saade, CEO of the company, confirmed in an interview.

The Marseille, France-based firm said it had spent close to $15 billion decarbonizing its fleet and will have 120 vessels that can run on methanol and LNG by 2028, the latter of which is often criticized for causing methane emissions.

The announcement comes amid a slump in container rates following last year’s exceptional strength. “We know that 2024 will be a difficult year,” Saade said. “Eventually, ‘25 could be similar to ‘24.”

© 2023 Bloomberg L.P.

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