Following the completion of MEPC 81, the Getting to Zero Coalition commented that delegates at MEPC81 and the ISWG have been showing a willingness to collaborate and listen to each other’s concerns. However, in terms of positions, the group is still very divided on how they see these policy measures taking shape.
Exclusively to SAFETY4SEA, the Getting to Zero Coalition stressed that the timeline to get these policy measures over the finish line is incredibly tight and thus, industry will need to see much stronger convergence over the coming months.
This convergence should mainly be around a basket of mid-term measures capable of delivering on the targets. This should contain robust and ambitious GHG intensity targets, a sufficiently high price on emissions, and revenue recycling mechanisms. A combination of measures is needed to ensure early uptake of scalable zero-emission fuels as well as generating revenue and investment certainty. This should be based on a well-to-wake approach that considers the full lifespan of the fuels to send a stronger message to fuel suppliers and to ensure delivery on the targets set out in the revised strategy.
A Global Fuel Standard (GFS) that sets GHG intensity targets in line with the revised strategy can send a clear[JF1] , predictable, and unambiguous message to shipowners and fuel suppliers that the uptake of near-zero and zero-emission fuels must rapidly increase between now and 2040. To avoid this, a GFS needs to be combined with a GHG pricing and revenue disbursement mechanism.
The GHG pricing mechanism capable of narrowing the competitiveness gap between fossil fuels and alternative fuels will provide a further incentive to reduce emissions. Disbursement of revenue raised through a GHG pricing mechanism can stimulate the early use of zero-emission fuels as well as contribute towards an equitable transition as funds can be channelled to support a just & equitable transition
Key barriers & opportunities
With regards to decarbonization, the Getting to Zero Coalition explained to SAFETY4SEA that we can acknowledge the following barriers, while at the same time see the opportunities arise:
- The biggest barrier for industry relates to the commercial viability gap between fossil fuels and zero-emission fuels, specifically in terms of cost, availability, safety and technological readiness. This creates investment uncertainty for the industry.
- Whilst innovation on new fuels is progressing, the industry is facing a chicken-and-egg situation in which fuel suppliers do not have the offtake certainty to invest in zero-emission fuel production and shipowners do not invest in zero-emission vessels (ZEVs) because the fuels are too costly and not yet available.
- This situation does, however, also provide a key window of opportunity with the current policy developments. Firstly, policy is key to support and de-risk first movers to incentivise early uptake of scalable, zero-emission fuels (SZEFs) which can prepare the wider industry for the transition and make the whole transition more effective. Secondly, policy can also support the transition by those who are not among the first movers, particularly one that is just and equitable, meaning no countries are left behind. For example, policy can be designed to minimise or mitigate any disproportionate negative impacts of the costs of the transition on lower-income countries. Furthermore, as the transition requires heavy investments, policy can ensure such lower-income countries can make these investments and decarbonise themselves whilst contributing to the wider transition.
- Finally, the transition also provides key opportunities for certain developing countries. As the sector is facing a lack of affordable renewable energy and alternative fuels, many developing countries can harness their renewable energy production potential to support the transition and reap the benefits.
Top three actions for the next day
Following the recent discussions during IMO Committee, the Getting to Zero Coalition would like to see industry stakeholders taking tangible action as follows, in order to progress towards a zero-emission future:
#1 Commit to and implement first mover action, such as participate in green corridors, purchase zero-emission (capable) vessels, invest in fuel production etc. This does not only help build confidence in the transition and support policy makers to meet this action with ambitious frameworks, but it also helps prepare the industry for the wider transition as it provides key learnings.
#2 Increase transparency of their activities’ climate alignments, for example by joining initiatives such as the Poseidon Principles (financial institutions), Poseidon Principles for Marine Insurers (insurers), the Sea Cargo Charter (charterers and soon shipowners), or the Science Based Target Initiative.
#3 Improving operational efficiency is crucial, particularly to meet the revised strategy’s 2030 target of 20% striving for 30% emissions reduction. Furthermore, improving operational efficiency can reduce the total amount of fuel consumption by the sector, which will make the switch to alternative fuels that are both more costly and less widely available easier. Finally, improving operational efficiencies can be implemented without large capital or operational investments.
Considering the MEPC 81 discussions, the Getting to Zero Coalition see as the main focus for discussion at the next MEPC meetings to be on the mid-term measures and the Comprehensive Impact Assessment, the outcomes of which will impact the design of the mid-term measures as many lower-income countries are concerned about the potential negative impacts of the measures on their economies
Furthermore, the Getting to Zero Coalition said to SAFETY4SEA that many of the topics discussed at MEPC81 are part of a longer process, including the energy efficiency work through the Carbon Intensity indicator (CII) and the mid-term measures.
The CII framework is already an adopted and implemented measure but is set to be revised by the end of 2026. To ensure delivering on the short-term emission reduction targets, the CII should be revised to include a well-to-wake approach or be revised to an energy intensity indicator. The mid-term measures are entirely new policy frameworks that need to be designed from scratch.
At the same time, the Guidelines for Lifecycle Assessments (LCA Guidelines) are being developed. Whereas the initial Guidelines were adopted in July 2023 in conjunction with MEPC 80, the Guidelines are further developed through an LCA Correspondence Group to expand work on well-to-wake factors for alternative fuels.
Engaging seafarers in the energy transition
In our question to what the industry can do to help engage seafarers who feel like they may not have a voice in the energy transition, the Getting to Zero Coalition noted that representation through the International Transport Workers Federation at the IMO is already a key tool to ensure their engagement.
However, many policymakers have never even spoken to a seafarer nor heard their concerns about the energy transition. Ensuring stronger and more consistent dialogue is therefore crucial. Ship managers can play a crucial role here by engaging with policy makers. ‘‘Take the work of our human sustainability programme, particularly its , which launched during our 2023 Annual Summit, and how it directly engages with shipping companies to improve life at sea for seafarers.”
How to move forward
Concluding, the Getting to Zero Coalition highlighted that it is key to start now implementing the revised strategy’s ambitious targets for 2030, 2040, and 2050. But most importantly, it is crucial that the energy transition is just and equitable, as well as an early transition that starts with first movers investing in scalable zero-emission fuels before 2030, after which the full sector starts transitioning directly to zero-emission fuels.
An incremental transition in which the sector as a whole slowly moves from fossil fuels to transitional fuels, and finally to zero-emission fuels in 2040 is an inefficient and costly transition that risks stranded assets as well as not delivering on the targets.
To avoid an incremental transition and support an early transition that is just and equitable requires a basket of mid-term measures that combines robust and ambitious GHG intensity targets on a well-to-wake basis, a sufficiently high price on emissions, and revenue recycling mechanisms.
…the Getting to Zero Coalition pinpointed.