Transport & Environment (T&E) assesses how much energy efficiency needs to be improved and how much green fuel uptake should happen by 2030, 2040 and 2050 for the IMO to meet its climate targets.
On July 7, 2023, the IMO agreed to a new climate strategy that includes reaching net-zero greenhouse gas emissions “by or around, i.e., close to, 2050.” In the meantime the IMO has set the target of cutting emissions by 20%-30% by 2030 and 70%-80% by 2040, against 2008 levels.
Transport & Environment analysis shows that to meet the upper bound of the 2030 target through the deployment of green fuels, more than one-third of international shipping will need to switch to zero or near-zero emissions fuels in the next 5-6 years. In terms of regulation, this would require setting a very high carbon intensity reduction target (around 34%) as part of the GHG Fuel Standard (GFS) that IMO is currently developing. This is a toll order and nearly impossible given the scale of the challenge.
Specifically, about 38% green fuels uptake would be necessary to deliver 30% absolute emissions reductions by 2030 compared to 2008 baseline. For GFS, this would mean improving the fuel GHG intensity by 25-34% by 2030 compared to the 2018 reference line chosen in this analysis. An alternative, and a more realistic approach would be to calibrate the GFS targets to the improved energy efficiency targets that this briefing recommends the IMO should establish. Energy efficiency improvements can be driven either by a reformed CII or transformed CII.
Furthermore, the former option envisages switching CII from TtW CO2 to WtW CO2e and setting between 29.4 and 38.2% carbon intensity reduction targets by 2030 compared to the 2018 baseline. The latter option envisages transforming the CII from carbon intensity indicator to energy efficiency indicator expressed in MJ/t-nm. This means that ships would need to cut their fuel consumption in order to improve their EEI; switching to low-carbon fuels would not be an eligible strategy. If the EEI option is chosen, this analysis concluded that an improvement of between 22.7% and 32.4% would be required by 2030 compared to the 2018 baseline chosen by this analysis.
As explained, Based on the IMO 4th GHG study, our analysis shows that WtW shipping emissions will grow in a BAU scenario by up to 15% by 2030, 29% by 2040 46% by 2050 compared to 2008 levels in a world where the rest of the economy meets Paris Agreement’s temperature targets.
These are in contrast to 30%, 80% and 100% emissions reduction goals relative to 2008 set by the Revised IMO GHG Strategy (fig. 2). It is important to specifically point out that, IMO targets are relative to the 2008 baseline, while BAU emissions are projected to considerably exceed the 2008 baseline emissions. As a result, emissions reduction relative to BAU projections will need to be much higher, e.g. up to 39% by 2030, and up to 84% by 2040. This suggests that in order to meet the IMO targets, deep emissions cuts need to be achieved, especially in this decade.
To deliver these emissions cuts, substantially stringent regulatory measures are required, which can be achieved by improving the existing CII regulation and adopting mit-term measures, including GHG fuel standard (GFS) and ambitious universal carbon levy on international shipping. The below sections will present the results of quantitative analysis for CII and GFS targets. Analysis of carbon levy is beyond the scope of this briefing.
