16 February 2023 (Lloyd's List) - The International Chamber of Shipping has spelled out details on its proposed “Fund and Reward” system to meet 2050 net zero carbon goals.
The ICS, which represents more than 80% of the world’s merchant fleet, explained that to achieve consensus among governments the contribution by ships per tonne of carbon dioxide emitted can be set by the International Maritime Organization at a relatively low level. This will still be sufficient to narrow the price gap between alternative and conventional fuels, it said in a statement.
The level of contributions to the IMO fund will be a decision for governments. However, the ICS has suggested that total funds of about $10bn per annum — which would require an initial contribution quantum of about $50 per tonne of marine fuel oil consumed — could be sufficient to fund a rewards programme up until about 2030. This would also provide tens of billion dollars to support maritime greenhouse gas reduction projects in developing countries.
The ICS board met in London last week and unanimously supports the proposal, it said. The ICS has also submitted the revised proposal to the IMO.
Under the proposed mechanism, shipowners will make mandatory contributions per tonne of carbon dioxide emitted to create a new fund overseen by the IMO to be established by 2024. The fund will be used to reward first movers of alternative fuels, such as methanol, ammonia and hydrogen, that prevent carbon dioxide emissions, it will also benefit users of sustainable biofuels and synthetic fuels, plus new technologies including carbon capture.
The system seeks to reward the uptake by shipowners of low- and zero-carbon fuels and provide billions of dollars of funding annually for alternative fuel production and bunkering infrastructure in developing countries.
“The fund and reward mechanism put forward by the 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 given the enormous challenge of transitioning the global industry to new fuels and technologies in less than 30 years,” said ICS deputy secretary-general Simon Bennett.
“Our immediate goal is to ensure that a levy-based global economic measure will be prioritised for rapid finalisation by the IMO Marine Environment Protection Committee at its next meeting in July. This critical meeting of governments is also expected to adopt a formal net zero target for shipping which will only be truly credible if a measure such as that proposed by the industry is taken forward immediately.”
“If we are to have a sustainable decarbonised future, governments need to support the shipping industry’s willingness to come forward with innovative measures that can incentivise first movers, while also providing support to developing countries,” said ICS secretary-general Guy Platten.
“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. Our board collectively and fully supports this proposal so that no one will be left behind in the transition to net zero fuels for shipping which can only succeed if implemented on a global basis.”
