As net zero dominates, Del Rio wants more focus on cruising's purpose

'We're caught up in the narrative that the world wants to be green, and so do I,' the Norwegian Cruise Line Holdings CEO said at Tuesday's State of the Industry session.

'Not sure we'll hit net zero'

'But I'm not sure we'll hit net zero in 2050, 2030, 2093, I don't know. I know the purpose of the cruise industry is to provide great vacations for customers and we don't talk enough about it because we get carried away by this narrative about sustainability and renewables and green and blue and IMO and everything else.

'I think it's time to be more balanced. Let's not forget about fuels, but let's not forget what the real purpose of our business is.'

Until this, the discussion was dominated by carbon-cutting efforts.

'We will achieve net zero by 2050 because we must, CLIA Global Chairman Pierfrancesco Vago said in his opening remarks.

'We need new fuels'

The industry can get there 70% through various emissions reduction efforts and technological innovation, he said, but the remaining 30% is down to the fuel. 'We need new fuels, sustainable fuels.'

While cruising is just a tiny sliver of the maritime industry, it's leading the way in decarbonization efforts, Vago asserted.

He recounted that 10 years ago, nobody believed LNG would be acceptable for cruise ships. Today, CLIA announced 60% of the newbuilds set to debut between 2023 and 2028 will use LNG as their primary fuel. It isn't the solution but a transition until other alternatives become available.

'We're creating demand for bioLNG and synthetic LNG,' Vago said, adding that until such alternatives are available in large quantities, the industry won't be able to reach net zero.

Need to prepare ships

'We need to have our ships prepared to take on the alternative energy as it becomes available,' said Jason Liberty, president/CEO, Royal Caribbean Group. One of the big announcements at Seatrade Cruise Global on Tuesday was how Wärtsilä is creating a flex fuel engine with the ability to use methanol for Celebrity Cruises' next Edge-class ship.

'We can continue to chip away each and every day on trying to reduce the amount of carbon we're emitting and have our ships prepared to plug in to the ports we go into and be sure it's clean energy,' which isn't always the case, Liberty continued. And it's important to think about retrofitting older vessels along with making sure new ones are adaptable to future technology.

There is quite a bit of collaboration in this respect, Liberty said, pointing to work with shipyards, engine manufacturers and other suppliers: 'It's broader than cruise.'

The industry doesn't have the scale to achieve net zero on its own, Josh Weinstein, president/CEO, Carnival Corp. & plc, said. 'There's no choice but to collaborate more so we can pool resources to have our voice heard ...'

Everyone's doing things individually, including LNG and retrofitting engines to accommodate different types of fuel.

The biggest unknown

'We're all moving in the right direction. The biggest unknown is what are we preparing for?' Weinstein told the Seatrade audience. 'Until we have more clarity, it's going to be difficult to satisfy people with an answer. We get asked all the time: Are you going to get to net zero? Yup. Do you know how you're going to get there? Nope.'

Weinstein said the industry will continue to collaborate and companies will demand their teams keep reducing carbon intensity each year.

'One thing that's certain, whatever the technology is, whatever the fuel is, if you use less fuel, you'll emit less carbon,' he added. 'And we are very focused on that.'

Do cruisers care about sustainability?

After Del Rio — who's retiring in June and was making his last appearance on the State of the Industry panel — interjected his views on the decarbonization focus, moderator Lucy Hockings of BBC World News suggested cruises attract millennials and younger generations, and they care about sustainability.

'I think everybody cares about it to some degree. Will they pay for it?' Del Rio said. One of cruising's challenges is that pricing, compared to land vacations, is too low, and the gap is widening.

''Maybe we haven't focused enough on what product we're delivering. People will pay for whatever it is that is valuable to them. And it seems that the cruise industry has not kept up in terms of pricing. We have to do better there.'

Cruises 25% to 50% cheaper than land vacations

Weinstein — making his first appearance on the panel since being promoted to CEO of Carnival Corp. last August — said cruises are 25% to 50% cheaper than a land-based vacation. 'We've got to do a better job communicating the value proposition of what a cruise is ... and we are working on that.'

When it comes to sustainability, Weinstein said it matters to people but may not impact their daily choices and purchase decisions as much as they think.

'People expect us to do good, to be good. But they're not basing their holiday decision on that because they're making an assumption. If we're not good, we're going to be off the list. But if we're seen as doing the right thing so we satisfy a baseline level of expectation, they'll come with us.'

He thinks that baseline is going to get higher with time so 'We have to stay ahead.'

What the public doesn't know can hurt the business

According to Vago, the wider public sometimes doesn't know what the cruise industry is doing on the sustainability front and when temperatures rise or their streets are choked with tourists, it's easy to point fingers at 'the big ship.' This can influence local political decisions so 'better story-telling is needed.

'We should be proud of what we've done so far. We've been through hell and back so many times — the geopolitical [issues], safety and security, the pandemic, we've done incredible things as an industry. With the environment, we don't have a magic wand but we're providing technical solutions with the yards and every day we're improving energy saving.'

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