- The International Chamber of Shipping (ICS) has proposed to achieve net zero GHG emissions from international shipping by 2050 to the US International Maritime Organisation (IMO).
- A feebate program was introduced in the proposal to incentivize the production and use of sustainable marine fuels.
- To globally implement the GHG reduction targets by 2027, a maritime GHG emission pricing must be adopted by 2025.
- The GHG fee is proposed at around US$60 per tonne of CO2 to create an IMO Net Zero Shipping Fund to support developing countries in reducing maritime GHG emissions.
- Steps have been taken to ensure that there is no disruption in global trade and international shipping, also focusing on the acceleration of production of new marine fuels.
The International Chamber of Shipping (ICS), conjointly with the governments of the Bahamas and Liberia, have proposed to the International Maritime Organization (IMO) to meet the ambitious target of achieving net zero greenhouse gas (GHG) emissions from international shipping by 2050. A new IMO Net Zero Shipping Fund would be established to allocate billions of dollars annually to help developing countries with their maritime GHG reduction initiatives, reports ICS.
Key Points
- Under this proposal, ICS mentions that ships would be charged a fee per tonne of CO2 equivalent emitted, to create a financial incentive to shift towards more sustainable energy sources.
- An annual GHG emission fee was introduced in the proposal, which aims to drive the transition towards zero and near-zero GHG marine fuels by rewarding the ships who opt for this over conventional fuels.
- The revenue generated from this GHG fee is to support an innovative feebate program that will incentivize the production and uptake of sustainable marine fuels, such as green ammonia and hydrogen.
- The proposal predicts that an appropriate GHG fee could be set at around US$60 per tonne of conventional fuel oil consumed by ships, and the reward rate at about US$100 per tonne of CO2e, for ships transitioning to cleaner fuels, could be sufficient to achieve the purposes of the measure.This dual approach would aim to address the current cost disadvantage faced by green marine fuels, thereby accelerating their market uptake.
- The collected GHG fees will be managed through an automated web-based IMO mechanism, which has already been prototyped by the ICS. The implementation of this system aims to ensure transparency and efficiency in the distribution of both fees and rewards.
- ICS emphasises the urgency of implementing a maritime GHG emission pricing mechanism in 2025, with global implementation slated for 2027. This step is deemed critical to achieving the IMO’s specified GHG reduction targets for 2030, 2040, and 2050.
- There would be further discussions in the upcoming round of IMO negotiations, set to take place in London on September 23,.
Opinions on the Proposal
ICS Secretary General, Guy Platten commented “A GHG pricing mechanism using a flat rate GHG fee and a feebate element will be vital to bring about the rapid development and uptake of green marine fuels. To incentivise the production and use of green marine fuels our proposal includes a carefully thought out feebate mechanism, which is fuel neutral, to incentivise prevention of up to 100 million tonnes of GHG emissions per year during the first five years. This will help de-risk investment decisions and enable shipping to rapidly reach a “take-off” point in the use of green marine fuels, something which is needed urgently as their current availability is virtually zero.”
He further commented “ It is time for governments ‘bite the bullet’. Unless a distinct GHG pricing mechanism and feebate programme are included in the IMO regulations adopted next year, we genuinely fear that shipping’s transition to net zero by or around 2050 will be unlikely to succeed.”
He also added “In addition to the implications for the achievement of United Nations climate change goals, any failure to agree a flat rate GHG Fee applicable to all ships globally would also lead to a proliferation of piecemeal, unilateral GHG charges being applied to shipping worldwide – regionally and/or nationally – with regulatory chaos, economic inefficiency, the risk of supply shocks and disruption to seaborne trade, and damage to IMO’s authority as shipping’s global regulator. In the view of ICS, a maritime GHG emission pricing mechanism means all ships should contribute GHG fees equally on the basis of their actual GHG emissions, consistent with fair competition and the ‘polluter pays’ principle.”
A comprehensive package of mid-term GHG reduction regulations will be developed for international shipping in upcoming IMO meetings.
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Source: International Chamber of Shipping (ICS)
