Shipping boss warns EU carbon plans threaten to increase industry emissions

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

Soren Toft, managing director of the Mediterranean Shipping Company, told the Financial Times that the European measures, which are still under consideration, would have the opposite effect of their intentions unless low-carbon fuels are easily available.

Indeed, operators would be forced to slow down their vessels to meet the demand for reductions, creating the need for new vessels to maintain service levels.

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

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

A ship’s emissions from the combustion of bunker fuel are much higher than those produced in construction, and other economic factors such as the price of oil and freight rates determine the speed of the ship, a- he added.

Comments from MSC, which is expected to overtake Maersk as the world’s largest container group in terms of capacity with the largest new ship order book, comes at a critical time as the EU prepares proposals to revise its carbon market next month.

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

Soren Toft has joined MSC as Managing Director, with the industry under scrutiny in its response to climate change and efforts to restore service reliability © Oliver O’Hanlon / MSC

A big question for the shipping industry is the scope of travel the EU will target in its revised emissions trading system as policymakers attempt to cut CO2 emissions by 55% 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’s green deal, said the emissions trading system would be the main mechanism used to help reduce emissions of CO2 in the maritime transport sector.

Carbon pricing, which allows emitters to buy permits to meet CO2 targets, would be a “real incentive for the [maritime] industry to decarbonize their fuel and decarbonise their entire operations, ”Samsom told FT’s Future of Europe conference last week.

He added that the industry could cope with the new obligations by using different types of vessels and differentiated navigation speeds to reduce its carbon footprint.

Graph showing shipping capacity, existing fleet versus backlog

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

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

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

But he insisted that the current disruptions in the global supply chain, which he says will likely continue into next year, “are not caused by carriers.”

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

But some smaller operators such as Torvald Klaveness and Maersk Tankers say the industry should accept that the EU legislates on maritime transport emissions and will work to influence the regional initiative rather than prevent it.

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