Wednesday, July 28, 2021

Shipping Chief Warns EU Carbon Plans Threaten to Increase Industry Emissions

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EU plans to cut carbon emissions threaten to increase the CO2 produced by the shipping industry, warned the head of the world’s second-largest container shipper.

Soren Toft, CEO of Mediterranean Shipping Company, told the Financial Times that the EU measures, which are still under consideration, would have the opposite effect of their intentions unless low-carbon fuels were readily available.

This is because operators would be forced to slow down their vessels to meet demand for cuts, creating a need for more new vessels to maintain service levels.

“For us, it is very clear that what they are proposing in the absence of carbon neutral fuels will add more capacity, more containers, all of which needs to be financed, built in Asia, which will produce more emissions,” he said.

However, Tristan Smith of the UCL Energy Institute said the idea that EU carbon measures would increase emissions from the industry “is not credible.”

Emissions from a ship from burning bunker fuel are much higher than those from construction, and other economic factors such as oil prices and freight rates determine the ship’s speed, he added.

MSC’s comments, which will surpass Maersk as the world’s largest container group in terms of capacity with the largest order book for new ships, come at a critical time as the EU prepares proposals to review its carbon market next. month.

It’s also significant that Toft, who joined MSC from Maersk in December, has spoken, as the group has rarely sought publicity since its founding in 1970 by Gianluigi Aponte.

Soren Toft has joined MSC as CEO with the industry facing scrutiny over its response to climate change and efforts to restore service reliability © Oliver O’Hanlon / MSC

A big question for the shipping industry is the extent of travel the EU will target in its revised emissions trading system, as lawmakers aim to cut CO2 emissions by 55 percent by 2030.

Shipping, which produces 2.4% of global CO2 emissions, is difficult to decarbonize because low-carbon fuels such as green ammonia or hydrogen are not widely available.

Dierderik Samsom, the European Commission official who heads the team in charge of the EU green deal, said the emissions trading system would be the main mechanism used to help reduce CO2 in the shipping sector.

The carbon price, which allows emitters to buy permits to meet CO2 targets, would provide a “real incentive for [maritime] industry to decarbonize its fuel and decarbonize its entire operation, ”Samsom said at the FT’s Future of Europe conference last week.

He added that the industry could meet the new obligations by using different types of ships and differentiated sailing speeds to reduce its carbon footprint.

Chart showing shipping capacity, existing fleet versus order book

Toft has joined MSC with the industry facing increasing scrutiny on two fronts: its response to climate change and efforts to restore the reliability of the service, which has collapsed during the pandemic.

MSC ships have lost 10,000 sailing days this year to waiting in congested ports, a third more than last year.

“We are striving to provide the service that we believe our customers are entitled to,” said Toft.

But he insisted that the current global supply chain disruptions, which he believes are likely to continue into next year, “are not caused by shippers.”

Another concern for the industry is the possibility of a patchwork of regional emissions taxes. “The EU will take that approach and then before we know it, we will have 10 different approaches to deal with,” Toft said.

But some smaller operators like Torvald Klaveness and Maersk Tankers say the industry should accept that the EU will legislate on emissions from shipping and work to influence the regional initiative rather than prevent it.

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