The International Chamber of Shipping (ICS) has proposed
a system which would incentivize the transition of the maritime sector towards Net
Zero carbon emissions. The system would reward ships and energy producers financially
for investing in /net zero emission fuels.
In a paper to the International Maritime Organization, IMO,
the ICS has proposed what it called a ‘fund a reward’ (F&R) system to accelerate
the adoption of alternative fuels.
The F&R proposal combines elements of various recent
GHG reduction proposals from a number of governments, plus a flat rate
contribution system previously proposed by ICS and INTERCARGO, with additional
ideas recently put forward by the EU 27 group of nations for a global IMO
measure.
ICS chairman Emanuele Grimaldi said that “with the ICS
fund and reward proposal, IMO member states have a new but very short window of
opportunity to put in place a global economic measure which can kick start the
development and production of alternative fuels for shipping. To achieve net
zero mid-century, these new fuels must start to become available in significant
quantities on a commercial basis no later than about 2030.”
Grimaldi said he hoped that the proposal would act as a
bridge between the climate ambitions of both developed and developing countries
“so that no part of the global shipping industry will be left behind.”
The reward rate would be calculated based on CO2
emissions prevented. It would be funded via a mandatory flat rate contribution
from ships per tonne of CO2 emitted. The industry body said that the ‘fund and
reward’ system could be established by 2024, if governments could agree on the
regulatory framework at the IMO.
ICS proposes that contributions from the global fleet be
gathered in an “International Maritime Sustainability Fund”. Such a fund, the
body said, could raise billions of dollars annually, which would then be
committed both to narrowing the price gap, globally, between existing high
carbon marine fuels and alternative fuels, as well as supporting much needed
investment in developing nations for the production of new marine fuels and
bunkering infrastructure.
The fund would reward ships according to annual reporting
of the CO2 emissions prevented by the use of “eligible alternative fuels”. For
example, a ship powered by ammonia could
generate a cost saving of more than $1.5m a year.
ICS secretary-general Guy Platten said that “we must
narrow the significant price gap of new, very expensive, alternative fuels to
accelerate their production and take-up, so that we reach a take-off point by
2030 on our pathway to net zero by 2050”.
Platten said that it was also crucial that the industry
support maritime greenhouse gas reduction efforts in developing countries.
“This fund has the potential to go beyond the traditional
reach of the IMO, boosting investment for the fuel production and bunkering
infrastructure in ports worldwide that will be vital for our global industry to
decarbonise completely.”
The ICS proposal aims to ensure that at least 5% of the
energy used by the world fleet in 2030 is produced from alternative fuels. This
would deliver against Mission Innovation’s 2022 Action Plan for zero-emission
shipping and would represent the equivalent of approximately 15m tonnes of new
fuels annually by the end of the decade, up from a current figure of little
above zero.
An impact assessment undertaken for ICS by Clarksons
Research identified that a financial contribution of up to about $100 per tonne
of CO2 emitted “would not cause disproportionately negative impacts on the
economies of states”.
However, ICS said that it believed that contributions
could initially be set much lower and then be subject to a five-year review – as
increasing quantities of new fuels become available.
The ICS proposal for a fund and reward (F&R) measure,
will be discussed in December 2022 after COP 27 and ahead of the next IMO
Marine Environment Protection Committee in London.
