Amid a growing interest across the industry on the need of market-based measures (MBM), BIMCO called states and the industry to start a dialogue on how to create a global ruleset for MBMs, in order to support the use of low carbon fuels and to create a level playing field for the industry.
The call follows a debate on globally regulated market-based measures, which were agreed at BIMCO’s board of directors meeting in late January 2021.
One way we can make the current low emission technologies competitive with traditional fuels is through some form of market-based measure. We need a mechanism that equalizes the cost between using low carbon fuels and traditional fossil fuels,
…says BIMCO president Sadan Kaptanoglu.
BIMCO specifically highlighted the need for market-based measures in shipping to be governed by global rules, “as it is critical that the industry is not required to pay for its carbon emissions multiple times“.
This is relevant if market-based measures are being implemented regionally as it has been announced by the European Commission.
A market-based measure can be described as a rule or legal framework that encourages a desired behaviour through financial incentives. In this case, the shipping industry should be encouraged to use low carbon or zero carbon fuels to limit CO2 emissions. But as long as using traditional fuels is dramatically cheaper, it will discourage the up-take of low carbon fuels and put the first moving companies at a significant competitive disadvantage.
Equalizing the cost can also spur on innovation, because the potential market grows, and speed up the installation of the required infrastructure,
IMO is a good platform for the debate on a ruleset, according to Kaptanoglu, but it is critical that the debate begins now, in order for the industry to make the transition in time to reach our CO2 reduction targets.
The BIMCO statement follows the adoption by the Transport Committee of the European Parliament of the Delli Report on more efficient and cleaner maritime transport, which calls on the Commission, among others, to address the carbon intensity of fuels under the FuelEU Maritime initiative.
The European Commission launched the initiative earlier in February, aiming to increase the use of sustainable alternative fuels in European shipping and ports, as part of its efforts to drive decarbonization and sustainability within the industry.
The Delli Report, which was adopted by parliament in late February, actually calls on the Commission to address under the FuelEU Maritime initiative, not only the carbon intensity of fuels, but also the technical and operational measures, which would improve the efficiency of ships and their operations.
Earlier in February, European shipowners also expressed their position that a fuel standard as a requirement for ships instead of fuel suppliers, under the FuelEU Maritime proposal, would risk failing to deliver emissions reductions and would be challenging to enforce.