If I were to invest $1bn for the best return in sustainable shipping until the end of this decade, I would choose investment targets from both publicly-traded and privately-held companies.
This article is part of a series written by people across shipping in response to this question about how to deploy a hypothetical TradeWinds Sustainable Shipping Fund:
How, where and why would you invest $1bn for the best return in sustainable shipping, as the industry grapples with the need to cut carbon emissions, improve efficiency and keep cargoes moving in a world facing multiple economic and political challenges? The investment will be made now and ideally held for the next seven years to the end of the decade. As an added bonus, give one policy or regulation you would like to implement from 1 January 2023 to benefit shipping?
Hence the challenge is not trying to call the best-performing shipping segments between now and 2030 but to pick companies that seem to be proactively and professionally driving green innovation in this space in a financially sound way.
First, I would invest $450m in AP Moller-Maersk shares.
Maersk has ordered 18 dual-fuel/methanol container ships of 16,000 teu to 17,000 teu for a total of $3.2bn. It intends to source at least 730,000 tonnes of methanol through production partnerships with the likes of Danish power company Orsted, China’s Green Technology Bank and US renewable fuel producer WasteFuel.
Maersk is the world’s largest public shipping company by market cap — about $30bn; slightly more than Cosco — and with a large commercial interface with increasingly environmentally conscious global consumers. Hence, Maersk has the motivation, capital resources and ambition to drive a change for more sustainable shipping.
Second, I would invest another $500m in Eastern Pacific Shipping shares.
Eastern Pacific has invested $1.8bn in 14 separate decarbonisation projects, including dual-fuel LNG, LPG and ethane vessels, while also developing ammonia and methanol dual-fuel technology. It has ordered and time chartered out more than 70 dual-fuel ships — a total newbuilding cost of $7bn — to name-brand clients such as Mediterranean Shipping Co, CMA CGM, Rio Tinto, BHP and Equinor.
In January last year, Eastern Pacific officially implemented a No Coal Cargo Policy. It also holds a significant stake in Edda Wind, which operates specialised vessels servicing the global offshore wind market.
Eastern Pacific is clearly an industry leader in driving a green transition.
Third, I would also invest $50m in Swedish company Liquid Wind (a client of Clarksons Securities).
One of the biggest challenges to a green transition for shipping is producing environmentally friendly fuel to scale and as cost efficiently as possible. Liquid Wind develops facilities that convert biogenic CO2 and renewable power into liquid carbon-neutral fuel (emethanol). It has sold its first emethanol facility to Orsted, is on track with its second and thereafter should scale rapidly.
Shareholders include Uniper, Alfa Laval, Siemens Energy, Topsoe and Elyse.
As for new policy regulations from 1 January 2023 that would benefit a sustainable future for shipping, I would implement a maximum age limit of 20 years for non-eco/conventional ships built, for example, before 2012.
