The International Chamber of Shipping (ICS) has set out details of a revised proposal to set up a ‘Fund and Reward’ system it is submitting to the International Maritime Organization (IMO) to help the industry meet 2050 net zero carbon goals.
The proposals confirm a plan for a Fund and Reward mechanism financed by a mandatory contribution by ships per tonne of CO2 emitted that TradeWinds reported last week.
Funds gathered by the scheme would be emitted to an IMO fund, which will reward first movers for the CO2 emissions prevented by the use of alternative fuels, the ICS said.
The ICS set out details of how a mandatory flat rate (levy-based) contribution by ships, which it suggests could be $50 per tonne of fuel, could be collected by an IMO Maritime Sustainability Fund.
To achieve consensus among governments at IMO, ICS said: “The contribution by ships per tonne of CO2 emitted can be set by IMO at a relatively low level and still be sufficient to narrow the price gap between alternative and conventional fuels.”
Funds collected would be used to reward the uptake of alternative fuels by first movers “which would significantly reduce the price gap whilst minimising the additional cost of marine fuel to ensure that there will be no disproportionately negative impacts on trade,” it said.
The level of contributions will be a decision for governments, but the ICS suggested an initial contribution of about $50 per tonne of fuel consumed would raise a total of about $10bn per year and could be sufficient to fund a rewards programme up until about 2030.
The funds would also support the production of alternative marine fuels in developing countries and be available to de-risk the rollout of the new bunkering infrastructure that will be required.
Fuels such as methanol, ammonia and hydrogen, as well as sustainable biofuels and synthetic fuels plus new technologies including carbon capture could be included in the scheme, depending on decisions by the IMO.
ICS deputy secretary general Simon Bennett said the immediate goal is to ensure that some kind of levy-based global economic measure will be prioritised for rapid finalisation by the IMO Marine Environment Protection Committee (MEPC) at its next meeting in July.
“The Fund and Reward mechanism put forward by ICS is intended to be as simple as possible for IMO to establish. With political will, it can be readily adopted via the existing IMO MARPOL Convention by 2024, so that our commitment to net zero by 2050 can remain plausible,” he said.
Guy Platten, secretary general of the ICS, said the previous MEPC meeting in December 2022 had shown increasing support for an economic measure which could provide the world fleet with the needed incentive to accelerate the energy transition.
“I am pleased that the principle of a global contribution paid by shipowners into a fund is increasingly being recognised as the fairest and most effective method to create the funds and incentives required to catalyse the decarbonisation of our industry,” Platten said.
The latest ICS submission provides information about GHG reduction measures to be prioritised for development and sets out a regulatory package, with suggested amendments to Marpol Annex VI, to show how the Fund and Reward mechanism can be adopted by IMO member states by 2024.
