Søren Skou Calls for $450 Per Tonne Bunker Tax to Cut Shipping's CO2

Image courtesy Maersk

Published Jun 3, 2021 8:27 PM by The Maritime Executive

On Thursday, Maersk CEO Søren Skou staked out one of the most ambitious decarbonization proposal in the shipping industry, calling for a carbon tax of at least $450 per ton of bunker fuel ($150 per tonne CO2-equivalent). The proposal is far more ambitious than ICS' $2 bunker levy or the Marshall Islands' $100 tax plan, though it is still substantially lower than Trafigura's estimate of $750-900 per tonne of bunkers ($250-300 per tonne CO2-equivalent) for an effective GHG tax.

"We propose a carbon tax on ship fuel of at least $450 per ton fuel ($150 per ton CO2), a levy to bridge the gap between the fossil fuels consumed by vessels today and greener alternatives that are currently more expensive," said Skou in a statement. "We all have a joint responsibility to do everything in our power to reduce carbon emissions. We owe that to customers, consumers and society in general."

Maersk Group is the world's largest buyer of bunker fuel, controlling about eight percent of the entire global volume. The tax would approximately double its fuel spend at present bunker prices. However, in a webinar hosted by the World Economic Forum on May 27, Skou pointed out that an extra few billion dollars per year in fuel costs for Maersk would end up as pennies of extra expense for the consumer. In addition, Maersk's biggest clients are setting science-based emissions targets for their supply chain, and they are asking for solutions. "We see this as a market opportunity, not a cost problem," he said. 

To ensure that low-carbon options are competitive, Skou called for an IMO-mandated "level playing field" in the form of a uniform bunker tax. "Today we know what the [future fuel] solutions will be. It's going to be some kind of combination between methanol and ammonia," said Skou. "And we know it's going to be more expensive, and therefore a carbon tax makes sense for us and we are calling for that to get implemented in the second half of the decade."

He emphasized that any market-based measure to encourage green fuel must take into account all lifecycle greenhouse gas emissions - particularly methane."I'm saying that because I'm worried about the narrative around LNG," Skou said. "It's just not a solution, and we should stop talking about LNG as something that has something to do with [addressing] climate change."

Methane has a much higher warming potential than CO2 when leaked from natural gas wells, pipelines and processing equipment. These emissions are hotly debated and substantially outside of the maritime industry's control, but proponents of LNG as a marine fuel point to the possibility of substituting biomethane and e-methane in the supply over time, phasing out conventional natural gas while continuing to use LNG bunkering infrastructure.