The International Chamber of Shipping (ICS) has submitted a detailed, fit-for-purpose proposal to shipping’s global regulator, the UN International Maritime Organization (IMO), for a Zero Emission Shipping Fund (ZESF).
In recognition of the urgency to move forward with workable
solutions to meet ambitious net zero targets, shipowners globally have agreed
to mandatory contributions on ships’ greenhouse gas (GHG) emissions to raise
billions of dollars annually. The purpose is to accelerate the transition by
the global commercial shipping fleet to net zero emissions by 2050 and support
developing countries’ maritime GHG reduction efforts.
The shipping industry’s updated proposal is co-sponsored by
the Bahamas and Liberia (two of the world’s largest flag State administrations,
measured in gross tonnage). The proposal builds on the “feebate” concept put
forward by the Government of Japan and support from EU States at IMO for a flat
rate “levy-based” global contribution system. Significantly, the updated
proposal adds a structure for transparency and accountability for how the
billions of dollars raised will be used, including those funds for use in
developing countries.
Guy Platten, ICS Secretary General, explained, “The
transition to net zero shipping must be truly global. Otherwise, it will not
succeed. ICS fully supports the net zero goal, which IMO has agreed on for
shipping. The 2050 goal will only remain plausible if government negotiators
now roll up their sleeves to develop the regulations needed to establish the
Zero Emission Shipping Fund. A global GHG pricing mechanism for shipping
urgently needs to be agreed on next year, which will de-risk investment in zero
GHG marine fuels and provide billions of dollars of funds to support developing
countries.”
“The Governments of Bahamas and Liberia and the global
shipping industry have come forward with a carefully thought-out mechanism,
which is equitable, transparent and simple. The first IMO target for 2030 is
less than six years away. If we don’t achieve a take-off point in the
production and uptake of zero GHG marine fuels by 2030, it’s hard to see how
net zero will be achieved by 2050.”
“The groundwork has been done and the regulatory
architecture has been carefully laid out. All that is needed is political will
from governments to implement this fit-for-purpose solution quickly and
effectively.”
IMO Member States will consider the Zero Emission Shipping
Fund and the “feebate” mechanism at their next round of GHG negotiations in
March. Governments have already unanimously committed to developing a GHG
pricing mechanism for international shipping by 2025. If governments agree, the
ZESF will be approved next year to help achieve net zero GHG emissions from
shipping by or close to 2050, in line with the ambitious GHG reduction targets
adopted by IMO Member States.
Under the proposal, contributions from ships per tonne of
CO2e emitted will be used to reduce the significant cost gap between zero GHG
fuels and conventional fuel oil, providing financial rewards (“feebates”) to
ships for the GHG emissions prevented by the use of these new marine fuels.
The transparent and accountable proposal will include
support for the production of zero/near-zero marine fuels, the roll-out of new
bunkering infrastructure in developing countries’ ports worldwide and support
training in the safe use of new fuels.
A detailed impact assessment has already been conducted by
Clarksons Research for ICS that highlights that a contribution rate which adds
a cost of US$20 to $300 per tonne of fuel oil consumed would have no
disproportionately negative impacts on national economies in terms of delivered
cargo prices.
The Zero Emission
Shipping Fund will allow the hard-to-abate shipping sector, which is completely
dependent on fossil fuels and where the current use of zero GHG fuels is
virtually zero, to achieve a “take-off” point in its use of more expensive
‘green’ fuels, such as ammonia, hydrogen, sustainable biofuels, synthetic
methanol and synthetic LNG.