Liner giant AP Moller-Maersk will need significantly more container ship tonnage to comply with pending carbon reduction legislation, according to chief executive Soren Skou.
Estimates based on the carrier’s own fleet suggest that between five and 15% of additional capacity would be needed as the new rules take effect in the coming years, he said.
The additional tonnage will be needed as vessels were likely to slow down to meet the emissions goals set by the International Maritime Organization (IMO).
“This is relatively new legislation. We are still trying to figure out what the impact will be on supply,” Skou told an earnings call today.
“But it looks like in order to comply, we will need somewhere between five and 15% more capacity (up towards 2030).
“That is a quite significant impact if the compliance is based on slowing down speed.”
Skou said carriers could comply with carbon reduction legislation both by slowing down or resorting to biofuel.
Under the IMO’s Carbon Intensity Indicatory (CII) guidelines, ships will be given an operational carbon intensity rating from A to E.
But Skou said that slow steaming was deemed the easiest way to improve the energy rating of older vessels from a D to a C.
That was partly because of the shortage as well as the relatively high price of biofuel, he said.
Enforcement question
Skou added there were lingering questions over how the new legislation will be enforced, as well as over the timeline of the new legislation.
“Our understanding is it will only be enforced in 2024 and 2025, therefore the short-term impact may be very limited,” he said.
“But longer-term our understanding of it could be quite significant.”
The CII is an efficiency rating assigned to ships based on the grams of CO2 emitted per capacity-mile. The first CII based on 2023 data is due no later than 31 March 2024.
Ship owners also need to comply with the Energy Efficiency Existing Ship Index (EEXI) regulation to be introduced on 1 January 2023.
The IMO’s Marine Environmental Protection Committee (MEPC) adopted the technical guidelines for the EEXI and CII at its 78th session in June.
