Pathway to Decarbonization

Addressing climate change is one of our top priorities and we are committed to continue to lead the path within the cruise industry

Climate change is a global problem. Making progress requires that progressive countries and companies lead the way by demonstrating practical, scalable ways to achieve decarbonization. Addressing climate change is one of our top priorities and we are committed to continue to lead the path within the cruise industry. Looking ahead, our business success, and our reputation, strongly depends upon ensuring our guests can continue to cruise in even cleaner, efficient and sustainable ways. This will allow us to maintain our economic success while also ensuring that our business model can thrive well into the future to serve many generations to come.

Our entire management team, including our Boards of Directors, is committed to addressing climate change. Our path to decarbonization involves multimillion-dollar investments and a multi-faceted strategy.

Key components of this strategy include adopting international frameworks and working with industry regulatory bodies to: address upcoming regulatory requirements and conditions, implement initiatives to maximize efficiency opportunities/gains, identify and implement low carbon fuels, invest in carbon efficient technologies, support and accelerate industry-specific research and development projects, establish internal goals supporting the path, and partner with other companies, non-governmental organizations and relevant stakeholders to help us achieve our objectives.

In the coming years, we are likely to see an array of emerging technological innovations as there is not a single technology (nor a combination of technologies) that can move the maritime industry straight into a decarbonization path at this time. As we navigate this journey, we are committed to evaluating options, working with various stakeholders, and adjusting our path as needed.

Regulatory Bodies and International Frameworks

The International Maritime Organization (IMO) is the United Nations (UN) agency responsible for regulating maritime shipping. The IMO estimates that approximately 2.2% of global CO2 emissions are generated by the shipping industry of which the cruise industry is a small part. We actively participate in IMO meetings and working groups through our trade association, Cruise Lines International Association (CLIA), to promote and develop initiatives that support a carbon-neutral shipping industry. We also recognize the role that international frameworks play in supporting carbon neutrality and we participate in those discussions as well. The following is a summary of the key recognized frameworks:

Paris Agreement

The Paris Agreement is an agreement within the United Nations Framework Convention on Climate Change (UNFCCC), to address Greenhouse Gas (GHG) emissions, mitigation, adaptation, and finance, signed in 2016. The agreement’s language was negotiated by representatives of 196 state parties. As of February 2020, all UNFCCC members have signed the agreement, 189 have become party to it, and the only significant emitters which are not parties are Iran and Turkey. The United States began the process to withdraw from the Paris Agreement in November 2019. Per the terms of the agreement, the withdrawal will take effect one year from delivery of the notification.

The Paris Agreement’s long-term goal is to keep the increase in global average temperature to well below 2 degrees Celsius above pre-industrial levels; and to pursue efforts to limit the increase to 1.5 degrees Celsius, recognizing that this would substantially reduce the risks and impacts of climate change. Additionally, the agreement aims to strengthen the ability of countries to deal with the impacts of climate change. To reach these ambitious goals, new frameworks will be put in place including developing appropriate financial flows, a new technology framework and an enhanced capacity building framework. This will further support action by developing countries and the most vulnerable countries, in-line with their own national objectives. In 2018, the IMO established an initial strategy on the reduction of GHG emissions from ships in line with the Paris Agreement and in support of the UN’s Sustainable Development Goals. The strategy includes reducing international shipping’s average CO2 emissions intensity by at least 40% by 2030 and by 70% by 2050 (relative to 2008 baseline). The strategy also includes reducing absolute international shipping GHG emissions by at least 50% by 2050 compared to 2008 baseline and pursuing efforts toward phasing them out entirely by the end of this century.

Carnival Corporation & plc fully supports the IMO’s strategy which is in alignment with the Paris Agreement.

Carnival fully supports IMO’s strategy which is in alignment with the Paris Agreement.

Proposed International Maritime Industry Greenhouse Gas (GHG) R&D Fund:

Several leading global shipping associations have developed a submission to the IMO to be considered by the Marine Environment Protection Committee. Carnival Corporation & plc supports this proposal under CLIA, which is a signatory to the proposal. The submission proposes the concept of an International Maritime Industry GHG Research and Development Board (IMRB), funded by mandatory R&D contributions from shipping companies. The industry proposal would principally rely on contributions from shipping companies at an initially proposed level of $2 per ton of fuel purchased for consumption. We remain optimistic on the approval of the proposal as it demonstrates the industry’s leadership and commitment to work together to fund innovative technologies.

European Union Green Deal (EGD)

The incoming European Commission has been preparing a series of new climate and environmental laws (the EGD) which were published in December 2019. Some noteworthy aspects of the EGD framework include the following:

  • An objective to deliver climate neutrality by 2050;

  • A near-term plan on how to increase the EU’s GHG emission reduction target for 2030 to at least 50% compared to 1990 levels (this is not aligned with the IMO or CLIA targets);

  • A likely proposal to end “fossil fuel subsidies” and review of tax exemptions for maritime fuels;

  • Extending the EU cap-and-trade scheme for carbon emissions to the maritime sector; and a potential regulation requiring docked ships to use Shore Power when in port.

Goals and Commitments

In December 2018, the Cruise Lines International Association (CLIA) announced a historic global cruise industry commitment to reduce the rate of carbon emissions across the industry fleet by 40% by 2030. As CLIA members, we fully support this industry goal and have also adopted this target as our new carbon emission reduction goal for 2030. Our concentrated efforts to reduce the intensity of our CO2 emissions began more than a decade ago and we have made significant progress ever since. To further support our disclosures, each year our GHG emissions are independently verified by Lloyd’s Register Quality Assurance, Inc.

2015 Carnival Corporation Goal

Reduce the intensity of CO2e (carbon dioxide equivalent) emissions from our operations by 20% by 2015 relative to our 2005 baseline, measured in grams of CO2e per ALB-km.

  • In 2014, we achieved our goal by delivering a 20% reduction.
  • In 2015, we made further progress by delivering a 23.4% reduction.
2020 Carnival Corporation Goal

Reduce the intensity of CO2e (carbon dioxide equivalent) emissions from our operations by 25% by 2020 relative to our 2005 baseline, measured in grams of CO2e per ALB-km.

  • In 2017, we surpassed our goal by delivering a 26.3% reduction.
  • In 2018, we made further progress by delivering a cumulative 27.6% reduction.
  • In 2019, we made further progress by delivering a cumulative 29.1% reduction.
2030 Carbon Emission Goal

Reduce the intensity of CO2e (carbon dioxide equivalent) emissions from our operations by 40% by 2030, relative to our 2008 baseline, measured in grams of CO2e per ALB-km.

In 2019, we achieved a 24.8% reduction from our 2008 baseline.

Partnerships

We recognize that addressing climate change requires a global effort and commitment, and we have worked and partnered with others within the industry to reduce our emissions and develop alternative fuels and technologies. Our efforts to deliver cleaner emissions from our ships also rely on the support of and the collaboration with key partners.

NGO – Partnerships

We partnered with the Bellona Foundation in 2018 to help support our climate change initiatives. Bellona Foundation is an independent non-profit organization that aims to meet and tackle climate challenges by identifying and implementing sustainable environmental solutions. In 2019, we became the first cruise company to join the Getting to Zero Coalition. This coalition is an alliance of organizations across the maritime, energy, infrastructure, and finance sectors committed to accelerating the decarbonization of the international shipping industry. The alliance’s goal also includes scalable infrastructure for zero-carbon energy sources, including production, distribution, storage, and bunkering. Supported by key governments and intergovernmental organizations, the coalition represents a leading group of over 80 companies, including global stakeholders from a variety of shipping-related industries such as fuel suppliers, engine manufacturers, marine classification societies, shipping companies, major ports, and more.

Wärtsilä Partnership

In 2017, as part of our plans to address our impact on climate change we enhanced our long-term partnership with Wärtsilä, one of our main engine manufacturers. We signed a 12-year strategic agreement, worth approximately $1 billion in total, which includes all engine maintenance and monitoring for 78 vessels within our fleet of 100+ vessels. As part of the agreement, engine-level efficiency and fuel consumption will be measured on a regular basis, providing improved transparency into engine performance that will result in further improvements to engine operations. The data provided will also allow for tailored optimization of the combustion process, which will also improve the quality of our air emissions.

Alternative Low Carbon Fuels - Liquefied Natural Gas (LNG)

The introduction of Liquefied Natural Gas (LNG) to power cruise ships is a major development that supports Carnival Corporation & plc’s decarbonization pathway. In the cruise industry, we have pioneered the use of LNG, and we are continuing to expand our investments in LNG as the marine industry’s most advanced fuel technology to date. We began the implementation of our LNG vision by using LNG while in port in Hamburg, Germany, in 2015. Since then, we have expanded our LNG capabilities. In 2018, we made history with the launch of AIDAnova, the first cruise ship in the world powered by LNG both at sea and in port. In 2019, we launched the second LNG cruise ship for our global fleet, and in the world, Costa Smeralda.

On the supply side, one of the keys to establishing LNG as a standard for powering cruise ships is building out an extensive, safe, and reliable infrastructure across the globe for this advanced fuel technology. As part of our strategy, we signed a framework agreement with Shell Western LNG B.V. (Shell) to be our supplier for the fuel to power our first LNG-powered cruise ships, and recently expanded our partnership to fuel North America’s first next-generation LNG-powered cruise ships. As part of this agreement, some ships will be fueled through Shell’s Partner Quality LNG Transport (Q-LNG) LNG Bunker Barge (LBB), a project that is part of Shell’s strategic plan to develop a global LNG bunkering network. The ocean-going LBB, which is designed to support growing cruise line demand for LNG as a marine fuel, will be the first of its kind in the U.S. and will allow our ships to refuel with LNG at ports along the southeastern U.S. coast. We are proud to be on the forefront of advancing LNG as a fuel source for the cruise industry. We look forward to continuing to work closely with Shell as they help to bring LNG to North America in what we hope will be the first step in building a strong foundation for the future of LNG fuel supply for cruise ships in the region.

Germany’s Blue Angel Eco-Label

Carnival Corporation & plc’s AIDA Cruises was awarded
the “Blue Angel” certification by Germany’s Federal Ministry for AIDAnova’s environmentally friendly ship design. The award recognizes AIDAnova’s design and technical innovations as the first cruise ship in the world powered by LNG both at sea and in port. In September 2019, the Blue Angel logo was painted onto AIDAnova’s side at the Port of Marseille. Click here for more information.

Bio-LNG

Bio-LNG or liquefied biomethane is a biofuel made by processing organic waste flows. Biogas develops when anaerobic digestion occurs, biological matter breaks down and gas is emitted in the process. Bio-LNG is practically CO2 neutral and has all the advantages of LNG versus diesel, including reduced CO2 emissions, quieter engine sound, lower NOx and significantly less pm (particulate matter) emissions. We are working with Shell as they are making the necessary investment to scale the technology and build a reliable supply infrastructure.

LNG Program Timeline

Investing in Carbon Efficient Technologies

We know that currently there is not a single technology (nor a combination of technologies) that can move the maritime industry straight into a decarbonization path. Therefore, we are committed to supporting industry-specific technologies as well as research and development projects.

Fuel Cell Technologies

In 2019, we announced a joint venture between Carnival’s AIDA brand, Meyer Werft shipyard, Freudenberg Sealing Technologies and other partners funded by the German Federal Ministry of Transport and Digital Infrastructure. The objective of the joint venture is to find practical solutions for climate-neutral mobility across all shipping. The groundbreaking “Pa-X-ell2” project specifically aims to develop a decentralized energy network and a hybrid energy system with a new generation of fuel cells for use in oceangoing passenger vessels. As early as 2021, AIDA Cruises will be the world’s first cruise company to test the use of fuel cells on a large passenger ship. The fuel cells are powered by hydrogen derived from methanol. The cells will enable cruise ships to cut carbon emissions, reduce noise and lower vibrations.

Battery Systems

In 2019, our AIDA Cruises brand signed an agreement with Corvus Energy, the world’s leading marine battery supplier, to begin production and installation of a first-of-its-kind lithium-ion battery storage system on a cruise ship. The battery system is scheduled to be installed in 2020. The technology is currently set to become the world’s largest battery storage system ever installed on a passenger ship.

Cold Ironing / Shore Power Technology

Cruise ships equipped with “cold ironing” or shore power plug-in capabilities can plug in to specific port connection facilities, allowing the ship to receive electricity from the electrical grid in the port instead of using the ship’s engines and fuel to generate power. Electricity generated by renewable sources such as hydro, solar, wind, and geothermal have a minimal climate change and air emission impact compared with non-renewable sources such as fossil fuels. In 2019, only 16 ports worldwide had the infrastructure able to provide shore power connections to our fleet, based on our itineraries and capabilities of ships frequenting those ports. These ports included: Hamburg, Germany; Seattle, Washington; Vancouver, Halifax and Montreal, Canada; Juneau, Alaska; San Diego, San Francisco and Los Angeles, California; Brooklyn, New York; and Shanghai, China.

Within the Carnival Corporation & plc fleet, by the end of FY2019, 47 ships were equipped with the ability to utilize cold ironing/shore power technology.

Operational Efficiencies

Throughout the years, we have invested in various systems to significantly increase our energy efficiency, which has resulted in fuel reduction as well as direct energy emission reduction. Below is a list of some of the initiatives we are currently working on:

  • Designing ships for greater efficiency
  • Increasing efficiency through ship operations and maintenance
  • Minimizing fuel use and engine emissions
  • Implementing other energy-saving initiatives
  • Minimizing engine emissions

Carbon Offsets

Our shipboard fuel consumption contributes to more than 97% of our direct and indirect carbon emissions. Therefore, our efforts are focused on actions that can directly reduce and ultimately eliminate the emissions generated by our fuel consumption. We understand that carbon offsets may play a role in our decarbonization pathway if technological innovations are not sufficient to eliminate our emissions. To address those potential gaps in the future, we may have to invest in climate protection projects to offset or counterbalance the impact of any remaining emissions. If any of our guests would like to offset the emissions generated by their cruise, we provide them with the number of CO2 emissions from their trip. In turn, they can contact an offset provider and contribute to specific climate projects based on their preferences. We are evaluating potential providers to facilitate the process for our guests.