Charting the course to a climate-neutral Europe and sustainable shipping

Today, the European Commission published its long-awaited “fit for 55” legislative package. This basket of measures will affect all sectors of the European economy as only a concerted effort can make Europe the first climate-neutral continent by 2050 and deliver the EU’s 2030 emissions reduction objective of at least net 55%. It is na?ve to believe that the “fit for 55” package “only” aims to reduce emissions. It should also be seen as the European Commission’s push to ensure that the EU does not miss out on the green energy revolution. It is simply an opportunity our old continent cannot afford to miss.

A Virtuous triangle: fuels, ships and infrastructure

When it comes to shipping, three key measures are put forward by the European Commission:

1.??The inclusion of shipping into the EU ETS;

2.??The FuelsEU Maritime Regulation; and

3.??The revision of the Renewable Energy Directive (RED).

This regulatory triangle will aim to incentivize the right behavior (ETS), push the use of the right fuels (FuelsEU) and support the production of these fuels (RED revision). For Maersk, the EU has chosen the right approach. All three elements, provided that they complement each other, can accelerate the decarbonization of shipping.

Maersk supports the phased approach chosen in ETS and the strong focus on spurring and financing innovative and not yet commercially viable technologies. The ETS proceedings can and should serve to cover part of the competitiveness gap of new renewable fuels that shipping will start using shortly, instead of ending up as subsidies for existing technology.

Future proofing regulation: fuel lifecycles and CO2 equivalents

But all three elements of this regulatory triangle also need to consider the journey towards decarbonization. We must not end-up picking winners (i.e. fuels) which are immature and sit on our hands until these become viable. Shipping needs to lower its emissions today and advanced biofuels such as green biomethanol should consequently be supported, at least for a period.

This can be done through an incentive mechanism in FuelsEU or RED for specific fuels based on their lifecycle emissions and their CO2 equivalent contents. Life Cycle Assessment will also ensure that we don’t push uptake of fuels with emissions elsewhere in the chain than from the ship. Only focusing on the CO2 coming out of the stack of the ship is no longer a credible or scientific path.

Stay at the IMO table

As stated previously, Maersk believes that the EU basket of measures should serve as an incubator to show the International Maritime Organization (IMO) that significant GHG reductions are possible and do not lead to major increases in consumer prices. We still believe that the EU should start with applying its virtuous regulatory triangle to intra-EU trade and then move to a broader scope if the IMO has not delivered by 2025. This will secure that EU Member States still have a strong voice at IMO based on facts and not politics. More importantly, it will be fundamental in securing a global carbon price for the 85% of shipping emissions not covered by the full EU MRV scope. By setting a deadline in 2025 we also acknowledge that we will not wait forever for the IMO. We need to see progress now.

Maersk looks forward to supporting and engaging with EU and non-EU stakeholders on the Fit for 55 package. This could chart the course for sustainable?shipping and the EU’s role in transitioning our economies to climate neutrality.??