Global shipping regulators face a pivotal decision: whether to penalize fossil fuel usage and incentivize greener alternatives. Drewry’s analysis delves into the policy discussions surrounding this critical issue, highlighting potential shortcomings.
Cost Chasm
Addressing the Economic Disparity Between Conventional and Green Marine Fuels. Despite ambitious decarbonization targets set by the IMO, the significant cost gap between conventional fossil fuel and greener alternatives poses a major challenge. The economic disincentive of green marine fuel, priced three to four times higher, remains a key hurdle yet to be addressed.
Regulatory Roadmap
Mapping Out Technical and Economic Measures at MEPC 81.MEPC 81 discussions in March centre around mid-term measures, including a maritime greenhouse gas emissions pricing mechanism. Guided by the 2023 IMO Strategy, proposed regulations emphasize a combination of technical standards and economic incentives to achieve emission reduction goals.
Policy Parallels
Drawing Insights from EU Regulations and Economic MeasuresThe proposed combination of technical and economic regulations mirrors strategies employed by the EU, such as the Emission Trading System (ETS) and ‘FuelEU Maritime.’ Acknowledging the necessity of economic measures alongside the GHG Fuel Standard, global shipping regulators aim to foster widespread adoption of low-emission fuels and accelerate emission reduction efforts.
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Source: Drewry
