The proposal will be debated ahead of the next IMO MEPC meeting
The International Chamber of Shipping (ICS) has announced proposals to financially reward ships and energy producers that invest in /net zero emission fuels, in a paper to the International Maritime Organization (IMO).
Aiming to accelerate the maritime industry’s transition to net zero, the ICS is calling for a ‘fund and reward’ (F&R) system to incentivise the adoption of alternative fuels, which currently cost at least two or three times more than conventional marine fuel.
The F&R scheme would combine elements of various recent GHG reduction proposals from several governments, plus a flat rate contribution system previously proposed by ICS and Intercargo, and ideas recently put forward for a global IMO measure by the EU 27.
ICS chairman Emanuele Grimaldi said: “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.”
He continued: “Compromise is always difficult but, in any negotiation, having a proposal like this can enable everyone to come together.
“I hope this proposal will 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 and funded via a mandatory flat rate contribution from ships per tonne of CO2 emitted.
The industry body said that the F&R system could be established by 2024, if governments can agree on the regulatory framework at the IMO.
The ICS proposes that contributions from the global fleet be gathered in an “International Maritime Sustainability Fund”, which could raise billions of dollars to narrow the price gap between existing high carbon marine fuels and alternative fuels.
The fund would also support investment in developing nations for the production of new marine fuels and bunkering infrastructure.
It is meant to 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 (among many other alternative fuels including methanol, hydrogen, sustainable biofuels and synthetic fuels) could receive a cost saving of more than US$1.5m annually.
ICS secretary general Guy Platten said: ““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. But it is crucial that our industry also supports 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.
It would represent the equivalent of approximately 15 million tonnes of new fuels annually by the end of the decade, a significant advance from a current figure of almost zero.
An impact assessment undertaken for ICS by Clarksons Research has identified that a financial contribution of up to approximately US$100 per tonne of CO2 emitted would not cause disproportionately negative impacts on the economies of states.
However, the organisation believes 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 proposal will be discussed in December 2022 after COP 27 and ahead of the next IMO Marine Environment Protection Committee in London.
