Logistics UK responds to Maersk CEO's call for green fuel pricing mechanism 

In a blog post for the World Economic Forum, Vincent Clerc, CEO of A P Møller-Maersk has called on international shipping stakeholders to use the upcoming two meetings of the United Nations International Maritime Organization’s (IMO) Marine Environment Protection Committee – this month and in April 2025 – to formulate an aggressive pricing mechanism to equalise the cost difference between marine fossil fuel and low-carbon alternatives and fund shipping decarbonisation.  

Clerc said: “If IMO member states agree around ambitious midterm measures, they will accelerate the urgent transition in shipping; if not, they will slow it down precisely when it’s more necessary.  

"Container vessels being built today will be powered by fossil fuels for decades to come. Although 3% of all greenhouse gas emissions originate with seagoing vessels and 11% from the global supply chain, moving goods by sea is still by far the most effective and environmentally friendly mode of transport.  

“The ongoing negotiations around the greenhouse gas strategy thus have the potential to either significantly accelerate the reduction of carbon intensity and emissions, or to decelerate these efforts.  

“Applying a greenhouse gas pricing mechanism based on market prices could have an undesired inflationary impact, especially for developing countries.”  

Clerc says a “feebate” that takes the extra cost of green fuels and spreads it across fossil fuels is a viable solution.  

“The idea is to collect just enough money to offset the price differential without massively increasing transport costs. It’s doable.  

"The World Shipping Council, on behalf of the container lines, has proposed to IMO the so-called Green Balance Mechanism.  

“This proposal would reward deep greenhouse gas reductions, as only fuels with a well-to-wake reduction of carbon intensity equal or superior to 65% will receive allocations. In other words, the higher the emissions, the bigger the fee, and the deeper the reduction beyond 65%, the greater the reward.  

“Furthermore, any measure should include an element to support a just transition, climate mitigation and energy transition in developing countries and growing economies.  

“Since shipping was excluded from the Paris Agreement, we have continuously urged the IMO and its member states to act – and the IMO has made it clear that it is committed to reducing GHG emissions as the regulatory body for the sector.”  

Alex Herdman, Logistics UK Senior Policy Manager said: "The maritime sector is at a pivotal moment in its ongoing commitment to sustainability. Rightly, the urgent need for ambitious midterm measures that will not only accelerate shipping's transition to low-carbon fuels but also ensure long-term environmental and economic sustainability, are being emphasised.  

“Logistics UK notes the proposal for a "feebate" mechanism, and the Green Balance Mechanism proposed by the World Shipping Council. It is crucial that any solution, while bridging the cost gap between fossil fuels and low-carbon alternatives, does not unfairly burden shippers and place undue inflationary pressure on global trade, particularly for developing countries. 

“The maritime sector is ready to work with international stakeholders to make the necessary investments in clean energy, and we urge International Maritime Organisation member states to seize this opportunity for transformational change.”  

Published On: 03/10/2024 13:40:00

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