The International Chamber of Shipping (ICS) has proposed a greenhouse gas (GHG) pricing mechanism to the International Maritime Organization (IMO) to accelerate the adoption of green marine fuels. As reported by Offshore Energy, the proposal includes a flat rate GHG fee and a “feebate” system to incentivize ships to reduce emissions by using zero or near-zero GHG energy sources. This initiative aims to overcome the cost barriers associated with new green fuels and support shipping’s transition to net-zero emissions by 2050.
GHG Pricing Mechanism and Feebate System
The proposed GHG pricing mechanism involves collecting a fee based on conventional fuel oil consumption and disbursing rewards (feebates) to ships that prevent CO2e emissions by using greener fuels. Initially, ICS suggests a GHG fee equivalent to $60 per tonne of conventional fuel oil, with a reward rate of $100 per tonne of CO2e prevented. This system is designed to make green fuels more economically viable, encouraging widespread adoption within the shipping industry.
Establishment of the IMO Net Zero Shipping Fund
From the revenues generated by the GHG fee, 20% will be allocated to a newly proposed IMO Net Zero Shipping Fund. This fund aims to support the feebate program and other initiatives that promote the development and uptake of green marine fuels. The proportion of revenue allocated to the fund may be adjusted within five years of implementation to ensure the program’s effectiveness and sustainability.
Regulatory Implications and Global Coordination
ICS emphasizes the importance of implementing a unified GHG pricing mechanism to avoid fragmented regional or national regulations, which could lead to economic inefficiencies and disrupt seaborne trade. The proposal, backed by Bahamas and Liberia, will be discussed at the upcoming IMO negotiations in September. ICS stresses that a consistent global approach is crucial to achieving the IMO’s revised GHG Strategy goals, which include net zero emissions by 2050 and a significant reduction in GHG intensity from marine fuels.
The proposal represents a strategic effort to align the maritime industry’s regulatory framework with global climate goals, facilitating a smoother transition to sustainable shipping practices.
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Source: Offshore Energy
