IMO Carbon Levy Debates And Key Moves In Alternative Fuels

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At COP29, IMO Secretary-General Arsenio Dominguez confirmed that a carbon pricing mechanism will be introduced for shipping emissions, yet reaching an agreement on this is just the beginning. The IMO’s 176 member states have varying priorities, leading to divergent proposals for the carbon levy amount.

Key proposals include

  • Liberia, Bahamas, and ICS Proposal: A minimum fee of $18.75 per metric ton of CO2-equivalent (mtCO2e), calculated based on the lower emissions value between tank-to-wake (TtW) or well-to-wake (WtW) emissions.
  • 6PAC+ Alliance (Marshall Islands and Others): A higher fee of $150/mtCO2e, specifically targeting WtW emissions.
  • EU and Japan: A universal levy of $100/mtCO2e based on WtW emissions.
  • Canada: Suggest a gradual increase, starting at $90/mtCO2e in 2027 and reaching $130/mtCO2e by 2030.

Countries such as China, Brazil, South Africa, and the UAE have yet to propose any specific pricing mechanisms. The IMO aims to finalize the pricing by October 2025, with an implementation goal set for 2027.

Other Noteworthy Updates in Alternative Fuels

  • Biofuel Pricing Challenges: Johannes Schürmann from FincoEnergies highlighted that limited knowledge of biofuel pricing indexes is making shipping companies hesitant to sign long-term contracts.
  • Ammonia Safety Standards: A consortium led by the Korean Registry and the Liberian Registry, with partners like HD Korea Shipbuilding, is developing standardized safety protocols for ammonia and international standards for ship-to-ship (STS) ammonia bunkering.
  • Canadian Investments in Shore Power and Alternative Fuels: Canada has allocated CAD 25.2 million ($18 million) for alternative fuel projects in Ontario, including shore power infrastructure upgrades and feasibility studies for a new public port.
  • Hercules Tanker Management’s New Orders: HTM has ordered six new 7,700-dwt IMO type 2 bunker tankers from China’s Jiangmen Hangtong Shipyard. These tankers are designed to carry both B100 biofuel and methanol, supporting the transition to alternative fuels in maritime transport.

The IMO’s carbon pricing discussions and new alternative fuel investments underscore the growing focus on sustainability in the shipping industry, as the sector moves towards its decarbonization targets.

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Source: ENGINE