Specifically, 19 companies, including Greek interests, which control more than 1,200 ocean-going vessels, with a total carrying capacity of over 150 million dwt, highlight the major practical problems that an agreement reached after major compromises could create for the industry, and for the global economy.
“Our goal is to ensure that the voice of the sector will be heard and taken into account by the responsible decision-makers,” they characteristically note.
According to the joint statement: “It is essential that the ‘IMO NZF’ implements measures for greenhouse gases (GHG) that are fit for purpose, providing incentives for available transitional options and sending the right signals to the market to enable the decarbonization of the shipping sector, avoiding excessive economic burdens and inflationary pressures on the end consumer.”
They further add that: “These fundamental issues cannot be resolved through guidelines to be issued after adoption. We believe that critical amendments to the IMO NZF are required, including the consideration of realistic targets and limits, surplus distribution and rewards to support the transition and SMEs, with transparency in fund management, before the regulation’s adoption is considered.”
The shipping industry has already undertaken particularly costly initiatives, with significant investments to reduce the environmental footprint of ships.
“Collectively, we have made significant investments to improve the efficiency and carbon footprint of our existing fleets, beyond orders for state-of-the-art new vessels. It is vital that we continue to be encouraged to invest in this direction, while ensuring safe, reliable, and competitive operational functions,” they characteristically note in their joint announcement.
And they add: “Recognizing the importance of a global framework for the shipping sector, we wish to emphasize that the IMO NZF, as currently defined, lacks a comprehensive impact assessment and, crucially, interim checkpoints for fuel availability – analogous to previous regulatory changes in fuels, such as IMO 2020. As it stands, we do not believe the IMO NZF will function effectively to decarbonize shipping in line with the IMO 2023 strategy, nor will it ensure a level playing field for competition, as intended. This causes us deep concern.”
Specifically, the points they have highlighted which will make the green transition of shipping problematic are as follows:
“The proposed fuel intensity limits are characterized by an excessively immediate and steep reduction, imposing targets at least a decade earlier than the existing European FuelEU framework. Given the time required for the adaptation of global infrastructure and supply chains, as well as for the design, testing, construction, retrofitting, and delivery of new compliant vessels by the shipping industry, it must be stated that the current framework cannot serve this transition.
On the contrary, it imposes a sharp turn and rewards the exclusive use of technologies that have not been fully developed, nor adequately evaluated for safety.
“These limits and the narrow reward margins embedded in the IMO NZF do not take into account the importance of a realistic and sustainable transition period, reducing the incentives for investments in both transitional and Zero-or-Near-Zero (ZNZ) solutions.
“There is no clarity on the governance or on how the funds collected through the IMO NZF will be used, especially regarding providing incentives to shipping companies for investments in known alternative fuels and efficiency improvements.
“The business case for substantial transitional fuels, such as biofuels and LNG, is ignored. The restriction of incentives for investments in the LNG value chain eliminates one of the future pathways for decarbonization with net-zero emissions, through bio- and synthetic /LNG.
“The failure to provide incentives for investments in known and available transitional technologies with established standards, and the exclusive focus on unproven solutions, will lead the majority of shipping to a ‘pay-to-emit’ model. This will disproportionately burden small and medium-sized enterprises (SMEs), especially those operating in the tramp shipping sector.
“Today, shipping consumes 3% of the world’s energy, based on widely available fuels. Under the IMO NZF, the shipping sector alone will require over 50 million tonnes per annum of low-emission hydrogen (mtpa) to meet the targets by 2040, a quantity corresponding to approximately 50% of the then-projected global production capacity, which is intended to serve all industrial sectors.
“In total, the IMO NZF will collect around 20-30 billion dollars annually by 2030, with a risk of cumulatively exceeding 300 billion dollars by 2035, if the global fleet lags behind the targets by just 10%.
