Lindsay Levin: Welcome, we're excited to have you here, and one of the things we're very keen to do with Countdown is to follow up on stuff and find out how our promises fare. And I know that Maersk, I believe it's correct to say that your greenhouse gas emissions, as a global business, are greater than that of Denmark, where you're based. So you're a big part of the challenge. So tell us, how's it going?
Morten Bo Christiansen: Thanks for having us. And yeah, so we have this dream or vision of decarbonizing our heavy-emitting business by 2040, so over the next 17 years. And I think some find that almost ridiculously ambitious. (Laughs) We find it quite exciting. And what is even more exciting is that we're actually starting to do it, we're actually part of making the dream come true and implementing solutions in our business.
And let me just share some facts with you. So over the last two years, we have ordered 25 container ships that can sail on green methanol, which is our choice of green fuel. It's a fuel that can be made from either renewable electricity or sustainable biomass. 19 of those are being produced as we speak. The first one, we took delivery of three days ago, so it's happening. We also just announced the first retrofit of an existing oil vessel that can, in the future, also burn green methanol so we can learn how to do that.
On the land side, we are building green warehouses, we are electrifying our terminals. We have 425 heavy-duty electric trucks coming into our US market, 58 already deployed, some of which actually just across Lake Michigan, in Chicago. We have 25 coming into Germany. So, you know, lots and lots of things happening to actually make that a dream come true that Jim spoke about two years ago.
LL: So, progress. This is progress?
MBC: Yeah, and it better be. Global logistics account for 11 percent of all emissions, so all the trucks and ships and planes and warehouses and ports. So we have work to do.
LL: So tell us about this first new ship.
MBC: I can do better than telling, I can actually show you. I think we have a video of it. There it is. So this is not a rendering, this is real steel. And we took delivery of this ship Sunday, and next Sunday, it's going to do the first bunkering of green methanol in Ulsan, in South Korea. Then, she's going to head out with our well-trained Maersk crew to set out for Shanghai, to pick up cargo. She's going to stop over in Singapore, in Port Said, and in Rotterdam, to pick up more green methanol, because she has to make it halfway around the world to arrive in Copenhagen on September 13th for name-giving. And then, she will be deployed in the Baltic Sea for operation.
LL: I can see we've got a beautiful map of that route. MBC: Yeah, and if I can -- This is just one ship, right? And, for those who know container ships, this is actually a rather small one. But that's really not the point here. I think the point is that this thing is real, right? It's happening. And not least, it is the first of many. We hear a lot of talk about exponential change, and how we need that.
And I'll give you some exponential data points. So three years ago, there were none of these ships on order, not a single one. Two years ago, there was one. That one -- oh, sorry, this one. (Laughs) One year ago, there was 23; 19 of those were ours. Today, we have 120 of these ships on order. There are now five major container carriers who have started ordering these ships, and a couple of feeder providers as well. So that's exponential change, but I think that's exactly what we need to shift this industry.
LL: Yeah.
(Applause)
LL: And there’s kind of a chicken-and-egg problem. You need the fuel, the ship, the ship design. Are you breaking away from this? Where do you start -- chicken and egg?
MBC: Yeah, I think the chicken has met the egg, or whether it's the egg that met the chicken? (Laughs) I mean, this is a supply challenge, right? We need to scale production of green methanol, because it’s important. It needs to be green methanol, not the conventional methanol made from fossil fuels. And that really is a challenge. Just to put that, a bit, into perspective -- we have 740 ships at Maersk. If all of those were to sail on so-called e-methanol, so methanol made from renewable electricity, we would need somewhere between five and six percent of all wind and solar produced today in the entire world.
LL: Just for your business? MBC: Yes.
MBC: So I think that the magnitude of this is almost mind-blowing. But I think that's just all the more reason to get started.
LL: So that scale, that magnitude, very daunting -- is that holding people back, different players in the industry? It's just too much?
MBC: I think there's, of course, the enormity of the challenge, I think that goes for any part of decarbonization, right? But I think, for shipping, particularly, there’s a lot of uncertainty around what’s the winning technology, right? Because there's this green methanol, that's one solution. You have green ammonia, you have green methane, you have liquified hydrogen, electrification, even nuclear. So there's this fear, I think, of making the wrong bet or getting it wrong, somehow. Of course, in an ideal world, we would spend a decade figuring out all the pros and cons and what is best. But we need to address this problem now, right? And honestly, there is no magic bullet here. All these solutions can work, I think they will work. They all have their pros and cons. But we just need to get on with it.
LL: And you've chosen methanol as your fuel of choice. Why is that?
MBC: It's very simple -- it works, and it works now.
(Laughter)
(Applause)
LL: It works, it works now, and these green fuels are still more expensive, because we've got to build up the volume. Talk to us a little bit about the price issues.
MBC: It almost sounds too easy, right? And it really isn't, because one of the big challenges is, of course, that these fuels are more expensive. So if we take fuel at the current oil price, green methanol can easily be twice, even three times the price. So that's of course quite a bit. And of course, somebody needs to pay the bill. Who needs to pick up that bill? At the end of the day, I guess it's all of us, as consumers, because it’s our consumption that creates the emissions. And the interesting thing is, when you check it through the value chain, it really dilutes. So if you double up the fuel price, that sounds crazy, right? Well, that means the freight rate goes up 10 to 15 percent. And if you take a pair of shoes or an item like that, that's, like, five cents.
And there's actually a quite interesting study by the Boston Consulting Group that shows that most consumer products can be made with a net-zero footprint, so no emissions in production, at a cost of somewhere between one and four percent. So that's really what we are talking about --
LL: So that doesn't sound too bad.
MBC: No, I think many of us could afford that, right? I mean, it's one year's inflation, it's really what it is. But the problem is that, if all the cost gets stuck at one place in the value chain, then things don't move, right? If you're a fuel producer, and you're producing a product that is two or three times the price of your fossil competitor, few would dare do that, and nobody would get any financing for it, right? So these fuel producers, they look to the shipowners to make long-term offtake agreements, and we do that. I mean, last year at Maersk, we spent eight billion dollars on fuel, so doubling or tripling that, that’s a pretty scary outcome. So we need to figure out how we can then turn to our customers, and have them pay a green premium, and they do.
So I think that's really what we need to do, we need to get these partnerships across the value chain so that we stand together and we just de-risk the thing. Because when you de-risk, speed goes up. And what we have done so far is we have talked to a lot of developers, we have signed up for the ship that we just saw, 10 years worth of fuel for that one. And for the other ones, we have around 30 percent on letters of intent for our expected consumption by 2030. So that's how we are trying to lean out and lend our balance sheet.
LL: So you're giving confidence to the value chain.
MBC: We're basically taking out commercial risk on these projects. And then we, of course, need to turn to our customers to figure out how they can either pass that onto us as consumers or somehow create value from that. That's really the challenge we have.
LL: Morten, thank you very much. Great to listen to you, and we wish you well with the rest of the journey.
MBC: Thank you. LL: Thank you very much.
