The cost of decarbonizing the shipping industry will have a knock-on effect on consumers, according to a CEO in the maritime industry.
“There will be an inflationary impact coming from [the] decarbonization of shipping … there is no question of it,” Bertrand Chen, CEO of the Global Shipping Business Network, told CNBC’s East Tech West conference in the Nansha district of Guangzhou, China.
New European rules that effectively tax shipping lines for their emissions would push up costs, Chen added.
“The EU government is imposing this cost to the shipping line … But now what that means is the shipping has to take action to decarbonize and naturally that will impact all the consumer. So, I think it’s just a trade-off people will have to live with.”
The European Union’s Emissions Trading System (ETS) is set to be extended to the shipping industry starting in January 2024, meaning that large ships entering EU ports will be charged for their carbon dioxide emissions.
The ETS currently covers sectors like mining and aviation and is designed to put a cost on carbon for the region’s most polluting industries.
Chen described the EU initiative as “a natural action that will lead to some interesting effects.”
“Suddenly you need to be able to prove that indeed you’re taking the right action [to decarbonize] and you can see in the shipping line industry some people … are investing in the methanol ships, who are setting up investment funds to go buy those resources, because it’s really hard to buy the alternative fuel. Some are more passive [and] are waiting to see,” he said.
Shipping line Maersk launched its first vessel with an engine fueled by green methanol in September, but analysts expressed concerns about supply of the alternative fuel.
Shoppers may be willing to spend more on items that have been shipped or produced in a way that “doesn’t create greenhouse gas,” but they will require proof because of the high risk of greenwashing, Chen said.
“Everyone will have to become decarbonized, it’s a question of time. And in that world, what you need is to be able to prove to the end consumer that indeed the action you’re taking is right and that’s something that’s not easy to prove today,” he added.
Using the blockchain to store and give access to legal and financial documents could help the shipping industry provide that proof, Chen said.
Maritime nations agreed in July to reduce emissions “by or around 2050,” during a meeting of the United Nations’ International Maritime Organization.
— CNBC’s Silvia Amaro and Sam Meredith contributed to this report.