The freight forwarder, Maersk, is betting big on zero carbon. Will it pay? : NPR

Maersk – the world's largest container company – has an astonishing goal. From here 2050, the company is committed to sending goods – from electronics to soy through sneakers – around the world, without carbon emissions.

The environmental rationale behind such a promise is simple: shipping contributes substantially to global climate change.

But the business case is not so obvious.

The target, announced at the end of last year, will cost Maersk billions to develop new technologies. Meanwhile, he will compete in an overcrowded market against competitors who do not support this burden. And there is no guaranteed financial gain if the work of the engineers succeeds.

So why do it?

The issue is not specific to Maersk, nor to the shipping industry. A growing number of companies are paying close attention to the risks of climate change. But, at the same time, they face shareholders who expect returns.

According to Maersk and external analysts, this ambitious promise is based on the answer to three questions:

• Will consumers pay more to reduce their carbon footprint?
• Will new technologies end up being cheaper than oil?
• Will the world really decide to fight climate change and impose stringent regulations?

Many on the line

Maersk operates 750 ships, including one arriving every 15 minutes in a port around the world. Some ships are as long as the Empire State Building.

The Danish company has been shipping goods all over the world since the era of steamships. Now he wants to usher in a new era, with zero carbon transport.

It's easy to make promises in the decades to come, but in all respects, Maersk is really committed to it. The company has already significantly reduced its emissions, at a price of one billion dollars to date. And the intermediate goal is to reduce emissions by 60% (compared to 2008 levels) by 2030. This is quite demanding, especially since simple and cost-effective options , such as improving efficiency, are already in place at Maersk. And then there is the zero carbon deadline of 2050.

To call it ambitious is a euphemism.

"The technology to get there does not exist yet," says Alisdair Pettigrew, marine energy consultant. "There are millionaires who will have to find the right solutions, but they are not there yet."

Today's ships depend on fuel oil – and a particularly dirty variety – or liquefied natural gas. Zero carbon alternatives, including hydrogen and biofuels, do not work to the size required for huge container ships.

And there is not much time to find alternatives. While 2050 may seem distant, ships are built to last 20 to 30 years. This means that container ships coming into service in 2050 will reach the oceans in only a few years. In the meantime – as if that were not enough – the new technologies will also require a whole new supply chain to keep ships full at ports around the world.

Ole Graa Jakobsen, Head of Fleet Technology at Maersk, explains that the fact that some people believe that the goal is unattainable is precisely why an ambitious goal is needed.

"We want to accelerate the development of solutions to get there and not sit on the fence and wait for someone [to do] something, "he says.

But, he says, Maersk will achieve its goal in a "commercially viable" way.

"An easy way to become carbon neutral … would be to make business decisions that are not very smart," says Jakobsen. "In that case, we would be very quickly out of order and not emitting carbon."

Save the world and stay in business

The business plan is based on three pillars: customers, cost reduction and regulation.

Maybe the customers – the big companies that pay for shipping goods all over the world – are interested in promoting a zero carbon system. Maersk is already marketing a carbon-neutral option using biofuels to customers like H & M

But how many customers are on board and how much more will they be willing to pay? Would that be enough to justify the expense?

Probably not.

"We are not so naive as we think … that all customers want to pay a lot for carbon-neutral solutions," Jakobsen said.

The second option: profitability. Maersk says that it is essential to reduce the expenses associated with these alternatives to fossil fuels.

And some analysts say that the technology of the future could be cheaper than oil – ultimately.

Shipping consultant Lars Jensen said that it was very difficult to beat the oil price at the present time, but that the technology of the future could significantly change the calculations.

"I do not necessarily predict that oil will suddenly become extremely expensive," he said. "I am arguing more and more the argument that alternative energy sources will become incredibly cheap over time."

He points out what happened with power plants: the cost of wind and solar electricity dropped dramatically. For the moment, this does not help Maersk, but maybe similar transformations could happen for the expedition.

Then there is the third possibility: coordinated and comprehensive government action.

Suppose that in the next two decades, the world agrees to fight climate change by applying strict rules. Think of a carbon price, high fees for burning fossil fuels, strictly enforced emission ceilings.

If this happens, a company that starts to adopt a CO2 neutralization strategy will now have a long way to go, while its competitors will find it difficult to adapt.

Helen Dewhurst, an analyst at Bloomberg New Energy Finance, specializing in sustainable development, points out that the International Maritime Organization – the body that regulates the shipping industry – is taking serious action on the quality of shipping. 39; air. The new limits for sulfur emissions come into effect early next year, after many years of discussions.

Some companies were caught off guard. "They did not think IMO would have the backbone to do it," she says. "And they did it."

The IMO also has carbon targets. But there is still no system to enforce them and the goals are well below Maersk's goal. But if it changes dramatically in the years to come, Maersk's bet could pay off.

But many analysts are skeptical, noting the recent history of inaction on climate change. They also say that it is difficult to enforce regulations in the maritime sector, which operates in several jurisdictions and often far from the eyes of regulators.

Bet on mankind

Given the uncertainties about the future of climate action, why would a company such as Maersk place a huge bet on the world's radical change of direction?

"I was trying to think of something like Pascal's bet," says Ned Molloy, a shipping consultant specializing in regulation.

Blaise Pascal was a mathematician, physicist and theologian of the 17th century.

His famous bet was about the afterlife. He argued that if you are not sure of the existence of God, you may as well be a believer and act accordingly.

If you're right, you're going to heaven – you win everything. If you're wrong, well, you're dead, whether you believe it or not. What does it really matter?

The climate version of Molloy has nothing to do with the reality of climate change. This is not in dispute. The question is whether you believe in the ability of humanity to stop emitting carbon.

If you bet we can, invest accordingly and you are right, then you have a competitive advantage: a winning company.

And if you're wrong?

"If … governments are not doing anything to control climate change, then at least, from what I've read from climate scientists, it might not be there." really grounded in the existence of a global container shipping industry "he says.

More extreme weather conditions are already affecting the ports. Add the potential disruption to global food production, the upheavals of the global economy, the possibility of floods or droughts shutting down the Panama Canal.

"If you're wrong, you have more serious problems," says Molloy.

Deciding to invest in the zero carbon strategy is a business calculation, of course. But the end result can become a little existential.