‘Green’ fuel is more expensive, but requires long-term thinking: Maersk CEO

On April 22, 2020, the container ship MORTEN MÆRSK sailed to Hamburg.

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Shipping giant CEO Maersk He acknowledged to CNBC on Thursday that switching to “green” fuels comes at a cost, but stressed the importance of focusing on the big picture rather than short-term pain.

Soren Skou’s comments come a day after his company said it wants the entire business to achieve net-zero greenhouse gas emissions by 2040, 10 years ahead of its previous target.

“As we embark on our journey to carbon neutrality, we’re going to use…green fuels,” Skou said in an interview on CNBC’s “Squawk Box Europe.” As a starting point, these fuels “may be two or three times … much more expensive,” Skou said.

“But we’re looking at 20 years, so we think the impact of inflation on consumers will be very modest.”

“For example, we spend about $400 on fuel per container today,” Skou said. “If it tripled, we would need to spend another $800 in each container.”

“It’s a lot of course, but … for example, in a container you have 8,000 pairs of sneakers, so 10 cents per pair. So that’s why I think … for consumers, it’s going to be manageable. “

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According to the International Energy Agency, international shipping – an important part of the world economy – accounts for about 2 percent of “global energy-related carbon dioxide emissions in 2020.”

As the focus on sustainability grows and major economies and businesses around the world look to reduce emissions and meet net-zero targets, the industry will need to find new ways to reduce the environmental impact of its operations.

Back in August, Maersk said it was ordering some large ocean-going ships capable of operating on what it called “carbon-neutral methanol.” The ships will be built by South Korea’s Hyundai Heavy Industries and will be able to carry about 16,000 containers, the company said.

Maersk said the ships would be equipped with dual-fuel engines, which would increase costs.

“Additional capex…for dual fuel capacity, able to run on methanol and traditional low-sulphur fuels, will be in the range of 10-15% of the total price,” it said.

Shipping isn’t the only company trying to find more sustainable ways to operate. In aviation, for example, there has been a lot of discussion about the potential of sustainable aviation fuels or SAFs.

In October, Ryanair chief executive Michael O’Leary acknowledged the need for ambitious sustainable aviation fuel targets But also expressed concern about how food prices could be affected.

During a discussion on CNBC’s “Sustainable Futures Forum,” O’Leary said his company is investing “significant amounts of money” with Trinity College Dublin to study SAF.

In April 2021, the two organizations launched a sustainable aviation research center, supported by a donation of 1.5 million euros ($1.72 million) from the airline. In addition to focusing on SAF, the center will also study noise mapping and zero-carbon propulsion systems for aircraft.

Ryanair itself has set a target of powering 12.5% ​​of SAF flights by 2030. But in an interview with CNBC’s Steve Sedgwick, O’Leary said he thinks it’s “a very ambitious goal — I’m not sure we’re going to get there.”

He went on to express his feelings about the wider impact of increased SAF use. “I do, however, worry about sustainable aviation fuels in the long run… how does that affect food prices in the future?”

“I think we’re going to get to a point in the next 10 or 20 years, not just for the aviation industry, but for the industry as a whole, around sustainable aviation fuels, it could have an upward impact on food. Prices.”