Industry associations have responded positively to the approval, by the IMO, of a first global pricing mechanism for GHG emissions from international shipping, with many describing the agreement as an important step for maritime decarbonisation.
The World Shipping Council (WSC), which represents the liner shipping industry, described the agreement approved by IMO Member States on Friday as ‘a major milestone for climate policy and a turning point for shipping.’
The WSC’s Vice President and lead IMO representative, Bryan Wood-Thomas, emphasised that in addition to creating a two-tiered mechanism that prices emissions proportionally to the GHG intensity of the energy used by a ship, the regulation also provides a mechanism that encourages the use of zero and near-zero fuels and energy sources.
‘These regulations are a critical starting point that gives us the needed regulatory structure to address this critical issue that impacts every corner of the globe,’ Wood-Thomas said.
First GHG pricing for shipping
The agreement reached by MEPC 83 on Fridayagreement reached by MEPC 83 on Friday sets out gradually tightening requirements for the fuel intensity of ships, starting in 2028 with an initial baseline reduction target of 4% and a higher ‘direct compliance target’ of 17%. These would increase year-on-year to reach a ‘base’ target of 30% and a direct compliance target of 43% in 2035.
Non-compliant ships would have to pay for their GHG emissions based on a two-tier system. The price would be set at $100 per tonne of CO2 equivalent for the first ‘tier’ of non-compliance, for ships that are compliant with the ‘base’ target but missed the ‘direct compliance’ target.
Ships which fail to comply with both the ‘direct compliance’ and ‘base targets would have to pay a higher ‘Tier 2’ price of $380 per tonne, with the possibility to bank or pool compliance surpluses.
If officially adopted by Member States in October, the regulation would also create an IMO Net-Zero Fund to redistribute revenues generated by the pricing mechanism, which would reward the use of zero or net-zero (ZNZ) fuels and support a just and equitable transition in developing countries.
Enough to drive investment?
Norwegian Ro-Ro operator Höegh Autoliners applauded the IMO and its member states for what it described as a ‘landmark agreement’.
‘This agreement sends a strong signal: it will now become more attractive to develop and implement green technology and alternative fuels — helping the entire industry move forward,’ the company wrote in a LinkedIn post.
‘We hope that this agreement will now provide the certainty which energy producers urgently need to de-risk their huge investment decisions,’ echoed Guy Platten, Secretary General of the International Chamber of Shipping (ICS).
While it ‘cautiously welcomes’ the new framework, ICS expressed concern that the agreement might not be sufficient to incentivise industry investment.
‘We recognise that this may not be the agreement which all sections of the industry would have preferred, and we are concerned that this may not yet go far enough in providing the necessary certainty. But it is a framework which we can build upon,’ Platten said.
This was echoed by the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping (MMMCZCS), which described the global emissions pricing, rewards for sustainable fuels and funding for a just and equitable transition contained in the agreement as ‘historic firsts’ for the shipping industry and ‘a leap forward for decarbonisation,’ but worries that the reduction pathways and penalties for non-compliance will not be sufficient to meet the ambitions of the IMO’s own 2023 GHG Strategy.
‘While it doesn't go as far as we see is necessary, it is a historic outcome that establishes a strong foundation for regulation of global emissions in shipping,’ the MMMCZCS said in a LinkedIn post.
‘This is a start. The Framework gives us something we’ve never had before: binding, global rules that can be strengthened over time. That’s where the work turns next,’ the organisation added.
Environmental groups disappointed
UK-based climate non-profit Opportunity Green criticised the agreement for falling short of the most ambitious proposals that had been championed by climate vulnerable countries, such as Pacific Islands, Caribbean and African states.
‘The IMO has made an historic decision, yet ultimately one that fails climate vulnerable countries and falls short of both the ambition the climate crisis demands and that member states committed to, just two years ago,’ said Emma Fenton, Senior Director of Climate Diplomacy at Opportunity Green.
‘The weak measure approved means aiming for a low bar and dragging our feet to get there,’ Fenton added. ‘It will neither ensure sufficient emissions reductions, nor raise the revenues needed for a just and equitable transition.’
The Clean Shipping Coalition also accused IMO of ‘falling far short’ of its own climate targets for 2030, 2040 and 2050 and ‘failing the people and regions most vulnerable to climate change.’
‘IMO member states squandered a golden opportunity for the global shipping sector to show the world how it can turn the tide on catastrophic climate heating, putting their own goals - eliminating the sector’s GHG emissions without leaving any countries behind - out of reach,’ said Delaine McCullough, President of the Clean Shipping Coalition.
The text approved by delegates at MEPC 83 is now scheduled for formal adoption at an extraordinary session of the IMO’s Marine Environment Protection Committee (MEPC) in October. If adopted, the new regulations will enter into force in 2027.
Photo: IMO
