Meet WasteFuel, the company helping Maersk achieve its decarbonisation goals
Shipping giant Maersk has recently made industry headlines when it announced it had decided to anticipate its net-zero deadline by a decade.
Maersk, the second largest shipping operator in the world, announced in January it would become net-zero by 2040, a decade before its original target.
Instead of complying with the International Chamber of Shipping’s pledge made ahead of Cop26, Maersk stepped up its game because “it is a strategic imperative to extend our net-zero ambition to the total footprint of the business.”
“The science is clear, we must act now to deliver significant progress in this decade,” Maersk’s chief executive Soren Skou said. “These very ambitious targets mark our commitment to society and to the many customers who call for net zero supply chains.”
No time for new technologies
To achieve such ambitious targets, the group is relying on a few trustworthy partners, including Californian low-carbon biofuel developer WasteFuel.
WasteFuel, a portfolio company of US sustainable investment firm IX Investments, received backing from Maersk and other partners – including Salesforce’s boss Marc Benioff and Aileen Getty – to develop sustainable shipping fuels.
“You know, the industry produces about 950 million tonnes a year of carbon dioxide, about 2.5 per cent of global CO2,” Trevor Neilson, WasteFuel’s chief executive and co-founder of IX Investments, told City A.M. in an interview.
Instead of experimenting with different technologies, WasteFuel develops its shipping fuel solutions licensing proven technology from around the world.
“We made a decision on the front end, that we weren’t going to go out and experiment with new technologies or try to develop our own,” he said. “When it comes to climate, we don’t have time for that. We have 417 part per million of carbon dioxide in our atmosphere.”
Maersk’s backing was significant as it allowed WasteFuel to launch in January WasteFuel Marine, a renewable fuel solution which aims to reduce CO2 and NOx emissions by 95 and 80 per cent respectively.
To produce WasteFuel Marine the company has relied on the anaerobic digestion, a process by which bacteria break down organic matter in the absence of oxygen.
“That will be our initial pathway to methanol,” argued Neilson. “But there are a lot of other ways to produce methanol that over time we’ll start using as we think their cost and efficacy make them usable.”
Fighting costs and short-term mentality
Cost is the main issue that hinders the scaling up of production, especially as the oil prices are considerably lower.
“Oil is an energy-dense substance that the world is used to paying for and in certain companies there is a resistance to pay a penny more for green fuels,” he said. Luckily, this is an old way of thinking as a growing number of companies are willing to pay a premium for green fuels.
The second problem sustainable fuel developer find, especially in shipping, is a very short-term mindset that many chief executives continue to adopt.
“A lot of chief executives don’t really want to make decisions for the long term, they just want to make decisions that impact the next quarter of their company’s profits,” Neilson added. “And if you’re thinking that way, related to climate change, then there’s a real problem.”
According to Neilson, many shipping companies are behind with their decarbonisation plans as a result of a widespread denial within the industry.
“I think others in shipping are in denial and over time that denial is going to be very painful for them because eventually regulation is going to come to the industry,” he said.
“I’d be worried if I was running [one of these companies] but it appears they are doing what many others have done over time, just pretending the issue will go away somehow.”
Reports of a new carbon levy’s possible introduction have been going around for the last few years, but recently have gained momentum. In November, the Wall Street Journal reported that the International Maritime Organisation was considering a new shipping tax to help the industry transition to net-zero quicker.
If adopted the new policy would see ship companies be charged $100 for each metric tonne of CO2 emitted per trip, the outlet reported, raising around $1tn over the next 30 years.
“By the time that happens 90 per cent of the shipping industry it’s going to be in absolute crisis, because it takes a long time to build new ships that burn on methanol,” Neilson said. “I would be terrified to be a shipping company chief executive who is not addressing these issues right now.”