To reach a global consensus on an issue that touches every single person on earth. Sounds impossible, right? Well that is the task we face next year as the International Maritime Organization (IMO) comes together to hash out a future path for the shipping industry.
Let’s start first with the common ground. The vast majority of the 176 IMO member states agree that the shipping industry must reach zero emissions around 2050. The question therefore isn’t if, but how?
This is where it gets tricky. Discussions at the IMO are a microcosm of global climate talks. National interest alongside the influence of the fossil industry is the name of the game.
In April next year, negotiators at the IMO will thrash out the details that will either set the industry on a path to zero, or leave it facing headwinds with the shores of 2050 coming ever closer.
Three key pillars remain up for grabs.
A global climate levy
Let’s start with the most high profile - although not the most consequential. A global carbon levy which taxes shipping emissions could be agreed upon in April. It has been backed by global leaders like Emmanuel Macron and Keir Starmer.
The EU pioneered carbon pricing for shipping by introducing it into its Emissions Trading System last year. While it is clear that the levy by itself is not enough to encourage companies to switch to greener vessels, as we demonstrated, it can be a major source of climate financing.
The global levy is proving much more controversial at the international level. Some countries like China, Brazil and Saudi Arabia outright oppose any kind of global price on emissions, which they see as external taxation on their economic interests.
This is a mistake. A carbon levy on shipping would be relatively tiny for an industry defined by economies of scale. Yet, from providing funds to small island and low-income countries, to supporting the uptake of new green fuels, carbon levy funds can be gamechanging, providing benefits for the majority of the IMO’s 176 countries.
The low-hanging fruit
The second pillar is efficiency, which is discussed at the IMO as the carbon intensity indicator (CII). Efficiency can massively reduce carbon emissions from shipping, in many cases overnight. Slower sailing can reduce emissions without negative effects on international trade. Technologies like wind-assistance can also provide much needed efficiency gains at zero operational cost.
Green fuels
The third and most crucial pillar will come down to which fuels are considered ‘green’ and how to create guaranteed demand from the shipping industry. While the global levy has so far grabbed all the headlines, the question of which fuels we should switch to and how fast has largely gone under the radar.
Not any more.
The consequence of bad decisions at this stage could have major repercussions down the line. Many countries are betting on liquified natural gas and biofuels. Both would be disastrous.
If you ignore the emissions that occur upstream in the production process, fossil gas and biofuels in theory provide significant emission savings compared to heavy fuel oil, the most common shipping fuel today.
But what happens upstream matters, too. Natural gas emits significant amounts of methane in its production, making it in many cases worse than the fuel it replaces.
Biofuels may seem attractive, but their upstream impact is devastating. The crops burned for fuel require vast amounts of land, which often needs to be cleared from forests first. This in itself releases huge amounts of carbon dioxide into the atmosphere. And that is before you consider the threat it poses to food security. A significant number of the IMO’s member states are vulnerable to food price shocks. To divert crops to fuelling ships is reckless in the extreme.
A real solution
There is a solution that can be both zero-emissions and can be scaled sustainably: green hydrogen-based e-fuels. The problem is these fuels are currently expensive. The IMO can give fuel producers and investors certainty by prioritising genuinely green fuels.
Biofuel and LNG-producing countries will try to build a consensus behind their fake solutions. This is not in the interest of the majority. E-fuels are the best solution for everyone. That sounds like consensus.
