Major Shipper Wants Global Maritime Regulatory Framework ‘As Soon As Possible’

Ahead of a critical meeting of maritime industry leaders this winter, global shipping and logistics company A.P. Moller – Maersk said Thursday that the industry needs a worldwide regulatory framework “as soon as possible.”

“What we need now is affordability of fuel production, availability, and of course, infrastructure development,” Maersk head of global partnerships, Concepción Boo Arias, said during a port conference in New York City. “What we need the most is regulation that will facilitate that.”

The International Maritime Organization is expected to vote on a Net-Zero Framework — a set of regulations aiming to reduce greenhouse gas emissions from global shipping — in late November to early December. The regulations look to help the IMO meet its goal of net-zero emissions by or around 2050.

Boo Arias emphasized that only a globally accepted regulatory framework would lead to the shipping industry seeing investments and capital commitments for cleaner bunker fuel alternatives across the value chain.

“Otherwise, this is not going to happen,” she said.

The IMO framework will require ships above 5,000 gross tonnage to reduce heavy maritime emissions over time. If the framework is approved, shippers will comply with a global fuel intensity standard and could be fined from $100 to $380 per metric ton of carbon dioxide equivalent for noncompliant fleets. The framework also includes a net-zero fund for ships with lower emissions.

Maersk announced in 2022 that the company aims to reach net-zero emissions by 2040, 10 years faster than the IMO’s plan. Boo Arias said the industry is “already investing” in dual-fuel vessels, and she described the challenge as an issue of scaling alternative fuels rather than developing technology.

“Many of our competitors are doing that (investing),” she said. “We already have 27 vessels that have dual-fuel engines that can actually use either the carbon bunker fuel or methanol.”

Maersk, which operates around 750 vessels worldwide, is set to receive its first delivery of methanol from China by the end of the year, Boo Arias said. She added that the company is “sending a clear demand signal” by investing in assets and signing long-term offtake agreements.

Without a widely accepted regulatory framework, Boo Arias explained, meeting different demand under various regional regulatory requirements would make costs “completely unbearable” for shipping lines, with inflation spanning across multiple industries.

Industry stakeholders have previously said that expensive clean-alternative fuels could increase costs for an industry with tight margins.

Ryan Calkins, Commission president at the Port of Seattle, told Dow Jones Energy that proposals in the IMO negotiations have seen Pacific Island nations seeking “quick and stringent ratcheting down of emissions.” Meanwhile, the U.S. and states in the Arabian Gulf have argued for a “lenient system.”

“I would suggest that the industry, for its part, is looking for a compromise where there are real questions about the availability of sufficient alternative fuels to meet demand,” Calkins said. Industry members are “wanting to ensure that whatever requirements are set, there is a real pathway to production of sufficient fuels to do that.”

Calkins said the U.S. flag fleets most recently represented 0.4% of global ocean-going vessel fleets, making the country a participant but not a significant vessel owner.

“We have to learn to work within a system that is determined primarily by other actors outside the United States,” Calkins added. “In spite of the current administration’s reluctance to move towards alternative fuels in the maritime space, it’s only slowed the momentum and hasn’t stopped it. There’s a sense, I think, amongst the maritime industry that we’re eventually getting there. It’s just a question of how.”

Boo Arias said removing the price gap between fossil fuels and net-zero fuels is a clear priority for Maersk, which could be accelerated with more certainty in the global infrastructure.

She added that Maersk “made a bet” on methanol, as it retrofitted some of its vessels. Highlighting that there is “enough methanol” beyond 2030, she said the company is “opening the scope” by exploring alternatives with ethanol for its vessels.

“We are resilient and we can make it,” she said. “We should make it.”

–Reporting by Shaheer Naveed, snaveed@opisnet.com; Editing by Dean Visser, dean.visser@dowjones.com