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MEPC83 is almost here. This isn’t the final chance to clean up the shipping industry in time for 2050, but if this were a football game we would already be in the 118th minute of extra time, looking for a winning goal. Except when it comes to decarbonising the shipping industry, there would be no lottery of penalties. Just game over.
Like the World Cup, almost all the world’s countries take part. But rather than just one winner, the aim of the game here is consensus.
There are a lot of proposals and a lot of noise around the best pathway to zero. But one thing is clear: without a global levy AND a green fuels requirement (GHG Fuel Standard) AND energy efficiency it will be almost impossible to achieve zero by 2050.
On paper the global levy is a simple application of the polluter pays principle. But this doesn’t mean all countries agree. Some like Saudi Arabia and Brazil want to continue giving this polluting industry a free pass.
T&E argues for a strong carbon levy of $150/tonne of GHG emissions. This will help to penalise pollution and reward those who move away from fossil fuels. Crucially, it will also raise significant funds that can be used to bridge the price gap between low carbon fuels and scalable alternatives, and support a just and equitable transition in climate vulnerable nations that don’t have the means to address the consequences of global climate change that they didn’t cause.
But a global levy on its own is not enough. The urgency of climate change means we need investments in green fuel production now, which requires guaranteed demand signals by the regulator. This can be achieved through what is being debated under the name a GHG Fuel Standard (GFS).
Most countries support the phasing out of the dirtiest fuels but disagree on how emissions should be counted and which alternative fuels should be subsidised.
Disagreements remain over three things: 1) how deep ships should decarbonise by and the timeline for it 2) which fuels should be considered green and 3) how much ships should pay if they fail to meet the decarbonisation targets?
The first is about goal and target setting. It goes without saying, without concrete binding targets, missing vague climate objectives is easy. The IMO must nail down these binding targets all the way to 2050 to provide certainty for the industry.
On which fuels should be considered green, this should be simple. Fossil oil and gas are not green, period. Similarly, neither are crop-based biofuels. A recent T&E report showed that current IMO plans risk creating a huge new market for deforestation-driving biofuels. As it stands, biofuel-powered ships could release an additional 270 million tonnes of GHG emissions in 2030 compared to today, making it worse than doing nothing. A real challenge is going to be finding ways to incentivise green hydrogen fuels, which are absolutely needed, but would struggle to take off without preferred financial support (at least at the start).
But while scaling up green hydrogen to a level that can fuel ships might take some time, there’s something that can be done right now: make ships more efficient. More efficiency means less fuel consumption and, therefore, fewer emissions. Efficiency can be achieved by encouraging ships to use wind power, slow down, or coordinate with ports to reduce waiting time. The best part? These options are already available to many ships globally.
Measures like the Carbon Intensity Indicator (CII) can help to ensure that ships improve their efficiency. But the IMO needs to focus on making sure that the CII is fit for purpose if they really want to support ships to meet their targets. If they fail to do so and continue discussing exceptions that erode its effectiveness, they will be leaving an easy win on the table.
The best IMO outcome should include a GFS that accounts for lifecycle emissions, binding GHG reduction targets for ships through 2050, combined with a universal levy of $150/tonne of GHG emissions, and a robust CII. This would guarantee predictable, high revenue to support long-term investment in e-fuels and clean technologies, while enabling a just and equitable transition.
Time is almost up. Can the IMO hit the target? The world is watching.
