Modelling a green corridor and the end of pre-feasibility where only the very basics are known: Type of fuel, Type of Vessel/Cargo and high level view of ports in scope. The value the model brings here is that in can estimate the quantity of fuel required for the corridor, the subsequent CO2 reductions, and a high-level view of the overall cost based upon public available assumptions. These output can be particularly useful when scoping a potential green corridor project, or agreeing on a project baseline within a consortium.

At this stage the project baseline has been agreed by the consortium, as the project goal are defined. Knowledge on the lifetime of the corridor, the quantity of cargo being transported, the quantity of fuel being consumed on the corridor exists, but costs from stakeholders remain unknown, as no data is shared in this pre-NDA time. By refining the input based upon the agreed baseline, the model gives a more accurate output of CO2 reduction and incremental cost (total and per cargo unit) which can be used as reference point for conversation. This allows consortium members to make their final decision as to whether they want to invest the needed hours in the feasibility study.

Generic assumptions stored in the model are replaced by inputs from consortiums stakeholders as their feasibility study progresses. At this stage a more refined outlook on the incremental cost gap is provided, as well as an assessment of the impact of regulations. Using the principal output of the model, the visualisation of the residual cost gap, assists projects in facilitating conversation around Consortium Cost Management. At this point, the model may consist of a mixture of generic data for those workstreams not finalized and project specific costs for those areas where the workstream maturation is more matured.

All detailed model inputs have now been provided by the commercial stakeholders in the Green Corridor consortium. After a thorough review, and agreement on the level of granularity acceptable to be made available, the output of the model can be used to communicate with external stakeholders, including governments, on the funding that is required to realize the green corridors. The ML 4 is a key input for the Strategic Investment Brief. The model also provides a high-level calculations on GDP Impact and Job Creation (in construction as well as in operation) from the corridor project, should the project pass FID. 

Banks and financial institutions can provide optimized financing through better loan terms, e.g., lower interest and guarantees. This may be achieved where the projects can demonstrate its sustainable benefits.

Governments and other regulatory bodies can introduce regulations such as CO2 pricing, other carbon restrictions, and other non-competitive measures that can play a vital role in closing the cost gap. Supporting mechanisms such as tax incentives, and hydrogen production incentives also contribute. The areas covered here has to be independent of specific project application but be setups where any project is eligible for funding/penalties.

Cargo owners and end-customers must pay green premiums for low-carbon transportation. It is easier to allocate some of the cost to the end-customer if the cargo is close to the end-user, such as with car carriers, ferries, and cruises, as it enables transparency on willingness to pay. Similarly, a homogeneous cargo enables transparency in allocating the premium, e.g., raw material, ferries/cruises, car carriers, and liquid bulk. Regarding cargo owners, a group of front-runners has indicated that they are willing to pay a premium of between 10 and 25 percent for sustainable logistics services. Cost can also come done, if cross-sectoral collaboration can be obtained. Ultimately, all the cost related to sustainable transportation has to be ascribed to the cargo, allowing the added cost to land at the consumers.

The value chain can actively manage part of the project's cost. Fuel producers can deliver fuel at reduced costs by aggregating fuel demand with other off-takers and therefore benefit from economy-of-scale. Port infrastructure costs can be shared across more corridors/users. For vessels, a batch order would potentially lower the unit cost, as well as the learnings from dual-fuel engines may help the vessel owner/operator cover part of the cost.

Governments must provide public funding, such as grants and direct subsidies, which play a significant role in closing the cost gap and are the last resort when the previous areas have been explored. This is a well-known method for stimulating/enabling new pre-commercial industries. Governments should consider the socio-economic benefits of green shipping corridors when evaluating funding requests, e.g., job creation, positive GDP impact, and contribution to decarbonization ambitions. It is the experience of the Mærsk Mc-Kinney Møller for Zero Carbon Shipping that it is easier to obtain public funding for green shipping corridors from countries with a strategic commitment to maritime and climate initiatives. These countries already have funding options or understand what is required to enable decarbonization projects. Furthermore, projects with a documented and positive sustainability impact will have greater chance of attracting funding. See section on Sustainability/Just & Equitable.