Lasse Kristoffersen: Time for Customers to Pay for Decarbonization

Lasse Kristoffersen, President and CEO of Wallenius Wilhelmsen, has an energetic and unapologetic approach to decarbonization: he's going to do it, and his customers will pay for it. The overarching idea is to distribute the cost to the ultimate end users - consumers - thereby spreading the load and making the change affordable. 

As a leader in the car carrier segment, Wallenius Wilhelmsen has the customer loyalty, credibility and financial wherewithal to lead - and Kristoffersen believes that it has an obligation to move first. "Somebody needs to stick out their head, and I think companies like ours have to show the way," said Kristoffersen at the DNV/Capital Link Oslo conference on Monday. "Somebody needs to say, okay, I need this amount of fuel, find who can provide it, and then turn around and find customers willing to pay."

Passing on the cost to the customer might be the most difficult part of the transition for smaller operators on the spot market. But Kristoffersen is in a position to demand change. "This year we have told all customers, if you want to make more business with us, you need to start paying for decarbonization," he said. "And they do."

By sending clear demand signals for green technology and motivating customers to pay, market-leading companies can show the way on innovation, he said. For Wallenius Wilhelmsen, the plan starts with biofuel, followed by green methanol within about five years and (hopefully) green ammonia within 10 years.

For others who would like to wait for the gradual progress of consortia, he warns that partnership can be an excuse for inaction.

"The fact now is that business is moving faster than regulation, and thank God we are, because business needs to solve this," he said. "That's my only issue with this week's theme of partnership. If it's used as an excuse not to show leadership - because it's easy to lean back and say, 'well, we have, don't have this, we don't have this, we have to collaborate in all this' - we don't have time. We're leaders of this industry."

Some leaders disagree. Lars Barstad, CEO of top tanker owner Frontline, told the panel that the John Fredriksen-controlled firm is a "late adopter" when it comes to decarbonization technology. Questioned about his thoughts on "green corridors" for green fuel testing, Barstad suggested that he was the wrong person to ask, adding "pass."

Regulating followers

Regulation may be the only way to bring along smaller shipping companies, which have limited ability to spend more than their peers (the minimum that the regulations require). The pace of regulatory change, however, may be gradual. A declaration of strengthened climate ambition is expected at IMO MEPC this summer; however, it is uncertain whether member state delegates will be willing to commit to real market-based measures - which will be required to motivate a broad transition, based on the latest studies. 

"[Member states are] at a critical juncture in July, which I think is a bit of a serious threat to the IMO. If those governments do not help that organization succeed in this moment in time, in the most important regulatory issue they'll probably ever face, they have to catch up on that and put their geopolitical differences aside," said Bud Darr, Group EVP for Maritime Policy at MSC, speaking at the Capital Link panel.