In a recent LinkedIn post,
According to the CEO of Maersk, next week’s International Maritime Organization’s MEPC81 emerges as one of the most crucial events of the year, aimed at securing urgently needed measures to decarbonize global shipping. The success of these endeavors hinges on three imperatives:
- Closing the price gap between green and fossil fuels is imperative. A financial mechanism is required to effectively level out the price difference between green and fossil fuels, thereby incentivizing the adoption of sustainable fuel choices.
- Ensuring a well-to-wake approach, rooted in science and resulting in genuine emission reductions, is crucial. Without this, there’s a risk of merely shifting emissions from one sector to another.
- Ensuring that the green transition is equitable and supportive of developing countries is essential. With investments and funding geared towards these nations, they could potentially become the world’s new green bunkering hubs.
Maersk, and several other key maritime players, have kickstarted the sectors’ green transition but we need strong regulation.
… Clerc explained. He also noted that Maersk fully endorses the Green Balance Mechanism proposed by the World Shipping Council, which comprehensively addresses all three points.
The WSC Green Balance Mechanism outlines a new approach to greenhouse gas pricing which makes it possible to close the price gap between fossil fuels and green fuels, at the lowest possible overall cost:
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Through the Green Balance Mechanism, fees are taken from fossil fuels and allocated to green fuels used, so that the average cost of fuel is equal.
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The greater the greenhouse gas emission reductions a fuel delivers – on a well-to-wake lifecycle basis – the greater the financial allocation received.
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The monies collected in any given year is determined by the amount of green fuels used, allowing for a relatively low fee at the start of the transition.
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The minimum fee necessary to offset the price differential in a given year is collected and allocated to ships using green fuels that meet a specific greenhouse gas threshold. This ensures that green fuels can be produced and used and does so with the least possible cost to transportation.
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The emission reductions required for a fuel to receive a price-balancing allocation are linked to IMO decarbonisation requirements, increasing in stringency toward the 2050 net-zero goal.
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The Green Balance Mechanism is adaptable and fully integrated with a greenhouse gas fuel-intensity standard. It can be used as a targeted greenhouse gas pricing mechanism, or a possible addition to an integrated measure.
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Other fees can be added to raise funds for climate mitigation initiatives and Research, Development & Demonstration projects, to provide a just and equitable transition.
The Marine Environment Protection Committee (MEPC), 81st session, will take place 18-22 March 2024, where various environmental aspects regarding the maritime industry will be discussed. Amongst key agenda items, MEPC 81 is expected to discuss the implementation of the 2023 IMO GHG Strategy.
We optimistically look forward to meaningful MEPC discussions next week, with the ambitious result of an IMO member state agreement that truly charts a net zero course for the maritime industry.
… Maersk’s CEO concluded
