A.P. Moller-Maersk A/S, one of the world’s largest shipping companies, expects the International Maritime Organization (IMO) to approve a charge on vessels’ greenhouse gas (GHG) emissions by 2025. This potential new regulation is part of ongoing efforts to curb emissions from the shipping sector, which releases approximately one billion tons of carbon dioxide annually.
Progress Toward Emission Reduction Rules
At recent IMO talks in London, member nations made progress toward developing regulations aimed at reducing the GHG intensity of energy used by ships. Simon Bergulf, Maersk’s group representative for Europe, expressed optimism that a pollution charge will be approved by 2025, although the specifics of the regulatory framework are still being finalized. The proposed rules would not only target carbon emission reductions but could also require the industry to pay billions of dollars if it continues to emit high levels of GHGs.
The Shipping Industry and its Role in Global Trade
Shipping, responsible for over 80% of global trade, is largely dependent on fossil fuels. This reliance has come under scrutiny, especially as geopolitical events, such as attacks by Yemen’s Houthi militants in the Red Sea, have forced vessels to take longer routes, increasing their carbon footprint.
Global Emissions Pricing and Challenges
The IMO, a United Nations agency, aims to finalize new rules in 2024, with the expectation that they will come into effect by 2027. If implemented, these rules would introduce the first-ever global, mandatory pricing mechanism for GHG emissions. However, reaching a consensus among the IMO’s 175 member states remains a challenge.
A previous proposal from Japan suggested a $60 per ton charge for emissions, which Maersk’s Bergulf described as reasonable. However, a $150 charge from day one, without any flexibility, would likely be unworkable for the industry, he added.
Shipping Industry’s Role in the Energy Transition
Jan Dieleman, president of Cargill Inc.’s ocean transportation business, believes the shipping industry is shifting from a lagging position to becoming a leader in the energy transition. If the IMO successfully implements the new regulations, shipping would be the first industry to adopt a global strategy with tangible measures to achieve net-zero emissions.
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Source: YahooFinance
