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Home Alternative Fuels Shipping CEOs call for an end to fossil-only powered newbuilds
December 2, 2023,
by
Jasmina Ovcina Mandra
The Chief Executive Officers (CEOs) of leading global shipping lines have issued a joint declaration at COP 28 calling for an end date for fossil-only powered newbuilds and urging the International Maritime Organization (IMO) to create the regulatory conditions to accelerate the transition to green fuels.
Image credit: Maersk
Their joint declaration calls for the establishment of four regulatory ‘cornerstones’:
An end date for building fossil fuel-only vessels and a clear GHG Intensity Standard timeline to inspire investment confidence, both for new ships and the fuel supply infrastructure needed to accelerate the energy transition.
An effective GHG pricing mechanism to make green fuel competitive with black fuel during the transition phase when both are used. This can be done by distributing the premium for the green fuels across all the fossil fuel used. With low initial volumes of green fuels any inflationary effects are minimized. The mechanism must also feature an increasing regulatory incentive to achieve deeper emission reductions. Furthermore, beyond covering the ‘green balance fee’, revenue generated by the mechanism should go to an RD&D fund and investments in developing countries to ensure a just transition that leaves no one behind.
A vessel pooling option for GHG regulatory compliance where the performance of a group of vessels could count instead of only that of individual ships, ensuring investments are made where they achieve the greatest GHG reduction and thereby accelerating decarbonization across the global fleet.
A Well-to-Wake or lifecycle GHG regulatory basis to align investment decisions with climate interests and mitigate the risk of stranded assets.
Major players in the shipping industry, including CEOs of Maersk, CMA CGM, MSC, Hapag-Lloyd, and Wallenius Wilhelmsen, expressed their shared conviction that regulation can play a key role in mitigating the cost of the green transition as well as the risk of extreme weather events. Given the cost of climate change is far greater than the cost of the green transition they look forward to being joined by other companies.
“Climate change is a general concern not a matter of competition. The CMA CGM Group is extremely pleased to join this unique Coalition, which brings together leading shipping companies to urge the adoption of the upper targets of the IMO trajectory. This sets an ambitious milestone for the decarbonization of our industry. By collaborating with others, we each take a new step in our energy transition, while ensuring a collective level playing field and access to greener fuels for the industry,” Rodolphe Saadé, Chairman and Chief Executive Officer of the CMA CGM Group, said.
This new commitment is fully in line with the CMA CGM Group’s ambition to be Net Zero by 2050. The company has already invested close to $15 billion in decarbonizing its fleet, resulting in almost 120 vessels capable of being powered by decarbonized fuels by 2028.