A new Insight Brief by the Global Maritime Forum (GMF) refers to the tipping point for decarbonizing International shipping, which is the most important climate change meeting of this decade that will irrevocably set a path for the future of international shipping.
According to GMF, International Maritime Organization (IMO), a United Nations specialized agency tasked with the difficult responsibility of ensuring the safety and security of shipping and the prevention of marine and atmospheric pollution by ships. Country delegates from around the world will come together for the 80th meeting of the Marine Environmental Protection Committee (MEPC 80) to revise the IMO’s initial Greenhouse Gas Strategy (GHG).
As informed, the revision of the initial GHG Strategy will have significant implications for the industry at large, sending critical market signals on what path international shipping will take as it seeks to decarbonize and address its climate emissions.
While the initial strategy contains a 2030 carbon intensity target, the revised strategy has the option to add absolute reduction targets for 2030 and 2040, and many countries have voiced their positions on this. The pace of the transition to reach the 2050 goal will be determined by a transition curve, which has implications for how quickly the industry will need to move to decarbonize. Strong interim targets will send a needed signal to take urgent short-term emission cuts and unlock green investments.
Without these targets, the cost efficiency and pace of uptake of new fuels and technologies will be severely compromised, putting unnecessary pressure on the industry in later decades.
Two aspects regarding the scope of the updated strategy will be critical going forward: how emissions are included and what pollutants are covered. For the former, emissions can be considered either on a tank-to-wake or well-to-wake basis. A tank-to-wake framework only considers the emissions of direct fuel combustion onboard the vessel, while a well-to-wake approach considers the full emissions including upstream production of the fuel.
Providing regulatory signals that encompass upstream emissions, i.e. signals that have a well-to-wake scope, is well within the IMO’s remit, with precedence seen in the implementation of the IMO’s Sulphur Cap that limited the sulphur content in fuel oil used in ships. Should the IMO limit scope to a tank-to-wake basis, multiple fuels that still emit GHGs upstream could be scaled in their use in the coming years. Alternatively, if all GHGs are in scope on a well-to-wake basis, energy producers and maritime actors will be incentivized to switch to scalable zero-emission maritime fuels based on renewable sources of energy.
IMO negotiators will need to determine when mid-term measures will be agreed and implemented. Current discussions highlight the likelihood of a package or basket of measures containing both an economic measure – for example a GHG levy that would both assist in closing the price gap between fossil fuels and
new zero-emission fuels as well as generating revenue that could be used to support a just and equitable transition – and a technical measure, such as a GHG fuel intensity standard which would give certainty to the energy transition for shipping by mandating the switch to zero-emission fuels and technology.
