The International Chamber of Shipping has called on countries to “bite the bullet” as it reveals its updated proposal for market measures to curb CO2 emissions.
Working with Liberia and the Bahamas, the chamber has put forward a proposal for an emissions fee that it says will help support a feebate mechanism, which is one of the market-based measures being proposed at the International Maritime Organization.
The ICS believes its proposal will also help stimulate green fuel production and support the proposed IMO fund that would be created to help innovation and aid developing countries with their maritime-related decarbonisation or mitigation efforts.
The discussions at the IMO have been slowed down by countries disagreeing on the preferred mechanism for a market-based measure, whether an emissions trading scheme such as that now operating in Europe or a feebate or levy.
The ICS proposal is for a fee, based on tonnes of CO2-equivalent emissions and then combined with a feebate mechanism to accelerate production of near-zero or green fuels and onboard carbon capture.
The ICS said it has no view on the value of the fee that should be applied to shipping to raise the money. It has suggested $60 per tonne of fuel oil or gasoil would help generate a reduction in the cost difference between current fuels and future fuels, as well as raise up to $2.5bn for the IMO’s net-zero shipping fund.
“If, for the first five years of implementation, the IMO sets the reward rate at about $100 per tonne of CO2e prevented (including upstream emissions), the proposal suggests that a greenhouse gas fee initially equivalent to about US$60 per tonne of conventional fuel oil consumed by ships could be sufficient to achieve the purposes of the measure,” the chamber said.
Secretary general Guy Platten said fuel makers should be incentivised to produce the fuels that shipping will increasingly be called on to use.
“To incentivise the production and use of green marine fuels, our proposal includes a carefully thought out feebate mechanism, which is fuel neutral, to incentivise prevention of up to 100m tonnes of greenhouse gas emissions per year during the first five years,” he said, adding that this will derisk investment decisions.
Platten called on IMO member states to get behind the proposal and not allow a fragmented industry to emerge with regional regulations.
Supply shocks
“It is time for governments to ‘bite the bullet’,” he said.
“Unless a distinct greenhouse gas pricing mechanism and feebate programme are included in the IMO regulations adopted next year, we genuinely fear that shipping’s transition to net zero by or around 2050 will be unlikely to succeed.
“Any failure to agree a flat rate greenhouse gas fee applicable to all ships globally would also lead to a proliferation of piecemeal, unilateral greenhouse gas charges being applied to shipping worldwide — regionally and/or nationally — with regulatory chaos, economic inefficiency, the risk of supply shocks and disruption to seaborne trade and damage to IMO’s authority as shipping’s global regulator.”
The IMO has arranged an intercessional meeting in London to discuss emissions reduction issues, including the various measures that are on the table. It will be held the week before the next meeting of the Marine Environment Protection Committee scheduled for early October.
