1 February 2024 (Lloyd's List) - THE International Chamber of Shipping, Bahamas and Liberia have submitted a fresh proposal to the International Maritime Organization to create a zero-emissions shipping fund as part of the UN agency’s mid-term economic measures. The proposal comes as member states start weighing up the potential measures on the table to fund the industry’s net zero ambitions.
The co-sponsors support the creation of a zero-emissions shipping fund that will collect revenues of a mandatory carbon tax contribution from eligible vessels and reward zero- and low-emission ships. The proposal also involves a separate fund called the IMO maritime sustainability that will channel revenues to developing countries that will invest in alternative fuel production and bunkering infrastructure.
The co-sponsors did not propose a level for the flat rate levy, although arguing that a level between $20 and $300 per tonne of fuel oil consumed would have no disproportionately negative impacts on national economies in terms of delivered cargo prices based on estimates by Clarksons Research.
“The government of Liberia and the global shipping industry have come forward with a carefully thought-out mechanism, which is equitable, transparent and simple. The first IMO target for 2030 is less than six years away. If we don’t achieve a take-off point in the production and uptake of zero GHG marine fuels by 2030, it’s hard to see how net zero will be achieved by 2050,” said ICS secretary-general Guy Platten.
The proposal comprises of a calculation based on the IMO’s new target of 5%-10% of zero or near-zero emission fuels and technologies by 2030. It argues that a fund with just under $10bn per year would be enough to reach the IMO’s 10% target, if the reward level is set at $100 per tonne of CO2 prevented. The same assumption is based on a global fuel oil consumption level of 300m tonnes per year during the first five years of the fund’s implementation.
The proposal builds on ICS’ previous fund and rebate mechanism submissions.
“The two key purposes of our proposal are to incentivise rapid production and uptake of the zero greenhouse gas marine fuels and technologies and also to provide billions of dollars to support the transition in developing countries,” Platten said during a press briefing for the proposal.
“It builds on the feebate concept put forward by the government of Japan, and also supports what the EU states have said that they are happy for a flat rate levy based global contribution system.”
The ICS introduced a mock website during the press briefing to demonstrate how the payments will be made by each vessel to the mandatory fund, arguing that it can be as simple as paying bills with online banking.
Shipping companies will just need to transfer their levy contribution to the IMO fund based on calculations of each vessel’s fuel consumption in line with the IMO’s lifecycle GHG assessments. The flag states will verify each vessel’s contribution rate and they will issue a compliance certificate to each ship.
Norway, Japan, China and the Marshall Islands previously proposed economic measures to the IMO ahead of MEPC80, although the UN body is yet to publish any new proposals ahead of MEPC81.
IMO member states will consider potential economic and technical measures in 2024, as the interim report on comprehensive impact assessments of such measures will be published in March.
MEPC81 and the preceding intersessional working group will discuss the findings of the interim report, while the final report will come out in October ahead of MEPC82. Member states agreed to adopt mid-term measures at an extraordinary MEPC in autumn 2025, following approval of measures at MEPC83 in spring 2025.
These measures will complement the IMO’s new GHG strategy that targets net-zero by or around 2050.
