Maersk says ocean shipping's zero-emissions push needs government support. (Photo: Maersk)
The transition to green shipping is a long road, especially given the limited availability and high cost of sustainable fuels. As a leading player in the industry, Maersk has suggested that regulatory improvements could be key.
The company advocates for expanding the scope of the Inflation Reduction Act (IRA) in the U.S. and supports the adoption of a "Green Balance Mechanism" to narrow the cost gap between fossil fuels and green fuels.
Maersk’s low-carbon voyage encountered setbacks
Recently, Maersk completed a voyage from China to the Port of Los Angeles using low-carbon methanol fuel, marking a first in the shipping industry. However, due to the unavailability of the required fuel in the U.S., the company had to use conventional fossil fuels for the return leg of the journey, leading Maersk CEO Vincent Clerc to express his frustration.
On August 27, during a ship naming ceremony, Clerc emphasized that if the shipping industry, which accounts for 3% of global carbon emissions, is to meet the decarbonization pace recommended by scientists and global leaders, more and cheaper green fuels are needed. He stressed the need for government and regulatory support.
Maersk has already proposed to the Biden administration that shipping green fuels should receive tax credits or subsidies similar to those available for trucking and aviation under the IRA. Additionally, Clerc, in an article published in July 2024, argued that Europe should also introduce similar strategies to avoid falling behind in the renewable energy transition.
Vincent Clercs suggests that the Biden administration include green shipping fuels in the IRA's tax credits or subsidies. (Photo: Vincent Clercs)
Maersk supports green balance mechanism to bridge fuel cost gap
Maersk, along with industry peers CMA CGM, Hapag-Lloyd, and the World Shipping Council (WSC), has proposed a "Green Balance Mechanism." This mechanism would impose fees based on the consumption of fossil fuels by ships and redistribute these fees to vessels using green fuels, thereby lowering the barriers to green transition. According to WSC data, green fuels cost 3 to 4 times more than fossil fuels.
Clerc stated, “We've proven that from an engineering perspective. We can decarbonize. But the market being what it is and the economics being what they are to do that without some type of incentives, without some type of carbon practices, it's going to be very difficult for consumers and customers alike to make the right choice.”
To achieve net zero by 2050, the International Maritime Organization (IMO) will be setting new regulatory frameworks, with the next meeting scheduled for late September 2024. This meeting will discuss incentives for net-zero transitions, standards for reducing carbon intensity of shipping fuels, and other related topics.
