The International Chamber of Shipping (ICS), which represents over 80% of the world’s merchant fleet, has submitted detailed proposals for the next round of IMO negotiations set for July this year with the aim of increasing decarbonization targets and setting a course for a net-zero future.
The submitted proposals support the development of a Global Fuel Standard as a technical measure to reduce the greenhouse gas (GHG) intensity of marine fuels, targeting 5% by 2030 and with an aggressive tightening of this standard after 2030, developed with industry experts to ensure the standard will work in practice.
Namely, the amendments are also targeting up to a 30 percent reduction by 2040, the implementation of which is heavily reliant on the availability and cost of marine fuels.
The amendments also suggest a phased approach to the implementation of the global fuel standard allowing for the gradual adoption of low-carbon fuels that would be sped up over time.
The amendments outline provisions for the verification and reporting of fuel carbon intensity. Ships would be required to obtain and maintain a valid Fuel Oil Non-Availability Report (FONAR) if compliant low-carbon fuels are not available.
“A fuel standard will not succeed on its own. It has to be supported by a radical economic measure, which will operate across the world to incentivise the production and uptake of the low and zero GHG fuels necessary to accelerate transition to a net zero destination,” Simon Bennett, ICS Deputy Secretary General, said.
ICS, and its members, are optimistic that governments will set a net zero target which sends a signal to energy producers and marine fuel suppliers, charting the direction of travel. ICS argues however that far more critical are the decisions that governments must now urgently take about the measures which will enable the end destination.
“Shipowners are willing to pay into a multi-billion dollar global fund, which if structured correctly, will reduce the cost gap between conventional fuel oil and the much more expensive zero GHG fuels as they begin to become available. The ICS “Fund and Reward” mechanism is an equitable measure that will also ensure developing countries can use some of the billions of dollars that would be generated each year, from shipowner contributions, to create the infrastructure of the future while incentivising first movers to act,” Bennett added.
The proposal champions a Fund and Reward mechanism that would be financed by a mandatory contribution by ships per tonne of CO2 emitted to an IMO fund. the fund would reward first movers for the CO2 emissions prevented by the use of alternative fuels such as methanol, ammonia and hydrogen, as well as sustainable biofuels and synthetic fuels plus new technologies including carbon capture.
“A growing number of governments recognise the merit of these industry proposals, but we need to ensure that those developing nations that are still concerned about the impact on their economies, of the small cost additional to marine fuel, can recognise the opportunity that this IMO fund will unlock.”
In addition, the contributions by shipping companies will generate billions of dollars annually to support the production of alternative marine fuels in developing countries. The fund will also be available to de-risk the rollout of the new bunkering infrastructure that will be required on an accelerated timescale.
Decarbonization of the shipping industry is heavily reliant on the creation of a level playing field for all players in order to gain traction. A just transition for developing countries is crucial in the context of decarbonizing shipping as it ensures that these countries, which often rely on fossil fuels for their economic development, are not disproportionately burdened by the costs and challenges of decarbonization. This would be possible by providing support, investment, and technology transfer to enable these countries to shift to sustainable and low-carbon alternatives while promoting social equity, job creation, and economic growth.
“To produce the very large amounts of low and zero GHG fuels, such as methanol, ammonia and hydrogen, sustainable biofuels and synthetic fuels (as well as developing new technologies such as carbon capture) is going to take real-world regulation and meaningful incentives, not just the adoption of a new GHG reduction target. Setting a direction of travel is important, but without the tools to get there it becomes meaningless aspiration.”
As explained by Bennet, governments have an opportunity this July to come together and chart a clear unambiguous course to a net zero future.
“Industry has provided the tools needed to reach this goal. A mandatory fuel standard with a “Fund and Reward” measure will unlock opportunity for all and ensure we reach our destination. A journey starts with a single step,” he added.
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