Skou: The 2020s must be the decade of action

Time is running out to act on global emissions in the shipping industry, turning up the heat on the sector to define the global rules so it can speed up its decarbonization efforts.

The International Maritime Organization (IMO) has to deliver substantial progress by the end of this year to accelerate the work needed to decarbonise shipping, Soren Skou, CEO of A.P. Moller-Maersk, said.

The industry major believes shipping needs to raise the level of ambition and set a zero-emissions target for 2050 instead of a goal of a 50% reduction. This is what Maersk has set out on achieving for its own operations.

“In 2018 we set ourselves an ambition of achieving a carbon neutral fleet by 2050. At the time we thought it to be a moonshot; now we see it as a challenging, yet achievable goal,” Skou pointed out.

In a piece written for the World Economic Forum, Skou insists the 2020s must be the decade of action ‘if we are to solve the shipping industry’s share of the global climate challenge before we reach a critical tipping point.’

The key focus should be on a market-based measure in the form of a tax levy on carbon emissions to bridge the gap between alternative fuels and cheap fossil fuels.

The IMO is set to discuss market-based measures at its November meeting, including a proposal for the establishment of a $5 billion Research and Development Fund.

The world’s largest container shipping company has proposed a carbon tax on ship fuel of at least $450 per ton of fuel to help the industry speed up the switch to carbon-free fuels.

The levy is seen as the best incentive for the market players to move forward with the transition and create a level-playing field for early movers and those still waiting on the sidelines.

 Skou pointed out recently that the IMO needs to deliver a market-based measure by 2025, so it can be implemented in the second half of this decade.

Should the IMO fail to act, the industry is likely to be faced with regional rules that would make shipowners’ lives a nightmare.

“If the IMO doesn’t reach agreement on global rules now, we are facing an inadequate patchwork of different rules in different regions. When our vessels sail from China to Europe or between China and the US, regional initiatives are challenging. However, if the IMO can’t deliver, then quotas for greenhouse gases through an Emissions Trading System in the EU might be needed to push the industry on the right track towards decarbonisation,” Skou writes.

“The EU then needs to balance its role as a regional regulator with that of a leading bloc at IMO. A strong voice from the EU at UN level is needed to raise ambitions and secure the adoption of meaningful global regulations.”

The CEO of the world’s largest container shipping company pointed out that the current momentum should be translated into action and collaboration to create the right market conditions for a carbon-neutral future for the industry.

As explained, the market should seize on the pressure from the consumers, investors, and decision-makers and take on the challenge and see it as a business opportunity.

The calls for urgent action are being made as Maersk confirms the order for its first methanol-powered container vessel.

The ship will be built by Hyundai Mipo Dockyard and is set to be delivered in 2023.