COP28: Top CEOs want end date for ordering fossil-only newbuilds

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In a joint declaration made at COP28 in Dubai, the CEOs of five leading shipping lines have called for an end date to be put on orders for fossil-only powered newbuilds, urging IMO to create the regulatory conditions to accelerate the transition to green fuels.

Making the call were Vincent Clerc, CEO of A.P. Moller – Maersk; Rodolphe Saadé, chairman and CEO of the CMA CGM Group; Rolf Habben Jansen, CEO of Hapag-Lloyd: Soren Toft, CEO of MSC Mediterranean Shipping Company, and Lasse Kristoffersen, CEO of Wallenius Wilhelmsen.

The shipping CEOs’ declaration came as data released at COP28 by the World Meteorological Organization showed that 2023 is set to be the warmest year on record, with greenhouse gas levels continuing to increase, and extreme weather and climate events having major impacts on all inhabited continents. These included major floods, tropical cyclones, extreme heat and drought, and associated wildfires.

The five shipping CEOs say that, with global temperatures breaching critical levels, the importance of shipping achieving IMO’s 2030, 2040, and net-zero 2050 greenhouse gas (GHG) targets is very clear. The only realistic way to meet those targets for an industry that accounts for 2-3% of global GHG emissions is to transition from fossil to green fuels at scale and at pace.

All five companies have been leaders in introducing lower greenhouse gas (GHG) emission ships. The CEOs say that, as frontrunners, they are convinced that even closer collaboration with IMO regulators will produce the effective and concrete policy measures needed to underpin the investment within shipping and its ancillary industries that will enable decarbonization to occur at the needed pace.

Their COP28 joint declaration calls for the establishment of four regulatory ‘cornerstones’:

An end date for new building of 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 emissions reductions. Furthermore, beyond covering the “green balance fee,” revenue generated by the mechanism should go to an RD&D fund and to 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.

“A.P. Moller – Maersk wants to accelerate the green transition in shipping and logistics and a crucial next step is to introduce regulatory conditions which ensure that we create the most greenhouse gas emission reductions per invested dollar,” said Vincent Clerc. “This includes an efficient pricing mechanism to close the gap between fossil and green fuels and ensuring that the green choice is easier to make for our customers and consumers globally. The momentum for green fuel is building and we are pleased to see strong partnerships across the industry as we continue our joint efforts of making decarbonisation in shipping successful.”

“This new commitment is fully in line with the CMA CGM Group’s ambition to be Net Zero by 2050,” said Rodolphe Saadé. “We have already invested close to $15 billion in decarbonizing our fleet, which will enable us to have almost 120 vessels capable of being powered by decarbonized fuels by 2028. Pioneer in LNG as a transition energy, our group has also launched several large industrial partnerships to diversify our sourcing with even more decarbonized fuels. In 2023, the CMA CGM Group will reduce its CO2 emissions by around one million tons.

“Our collective responsibility for a sustainable future and clean practices is paramount,’ said Rolf Habben Jansen. “At Hapag-Lloyd, we reaffirm our commitment to advance the decarbonization of the maritime industry and strive to be at the forefront of the energy transition. We believe that a regulatory framework and clear targets are crucial to accelerating the introduction of alternative fuels and reducing our carbon footprint. This commitment is in line with Hapag-Lloyd’s goal of achieving a net-zero carbon fleet by 2045 and reflects our industry’s unwavering commitment to environmental responsibility.”

“Shipping is at the forefront of technological innovation when it comes to decarbonization and at MSC our fleet renewal strategy includes 100 dual fuel vessels.” said Soren Toft. “We are proud to be part of this unprecedented collaboration with our peers and it is only right that together we follow this path towards net zero that we must achieve by 2050. The support of Governments across the world will be an essential element to reach our common goal and among those efforts we want to see an end to delivery of ships that can only run on fossil fuels. MSC has fully supported and committed to net decarbonization by 2050 but without the full support from other stakeholders particularly energy providers it will be extremely difficult to meet those objectives – no one can do this alone. Today it feels like we are one step closer in this regard, but concrete supply of alternative fuels and globally recognized GHG pricing are essential to achieve our goals,”

“At Wallenius Wilhelmsen we have decided to be a shaper of the journey to net-zero and focus our investments in supporting this ambition,” said Lasse Kristoffersen. “Our customers want to partner with us on the voyage. Now, we need a global regulatory framework matching this ambition to drive the investments needed at a global scale.”