Countries Gather to Discuss Shipping’s Green Transition Regulations
The world’s largest maritime nations are convening in London on Tuesday to deliberate on the adoption of regulations aimed at transitioning the shipping industry away from fossil fuels in order to significantly reduce emissions. If the deal is adopted, it will mark the first instance of a global fee being imposed on greenhouse gas emissions that contribute to climate change. Most ships today operate on heavy fuel oil, which emits carbon dioxide and other pollutants during combustion. Nations are convening at the International Maritime Organization headquarters until Friday. The Trump administration has firmly dismissed the proposal and has warned of potential retaliation against nations that back it, paving the way for a confrontation regarding the climate agreement. In April, member states that IMO reached an agreement on the contents of the regulatory framework. The objective is to implement it during this meeting. “That would be a major win for the climate, public health, the ocean and marine life,” said Delaine McCullough at the Ocean Conservancy. “For too long, ships have run on crude, dirty oil,” she said. “This agreement provides a lesson for the world that legally-binding climate action is possible,” said McCullough.
Over the past decade, shipping emissions have increased to approximately 3 percent of the global total, driven by the expansion of trade and the significant fossil fuel consumption of vessels transporting cargo over extensive distances. The regulations, known as the Net-zero Framework, establish a marine fuel standard that progressively reduces the permissible greenhouse gas emissions from the use of shipping fuels. The regulations also establish a pricing system that would impose fees for every ton of greenhouse gases emitted by ships above allowable limits, marking what is effectively the first global tax on greenhouse gas emissions. A fundamental standard exists for the permissible greenhouse gas intensity of fuels. A more stringent direct compliance target necessitates a further reduction in greenhouse gas intensity. “If ships sail on fuels with lower emissions than what’s required under the direct compliance target, they earn surplus units,” effectively credits. Vessels with the highest emissions would be required to purchase credits from other vessels under the pricing system, or acquire them from the IMO at a rate of $380 per ton of carbon dioxide equivalent, in order to meet the baseline compliance level. Furthermore, a penalty of $100 per ton of carbon dioxide equivalent is imposed to achieve direct compliance. Vessels that achieve the minimum target yet fail to comply directly are also subject to a penalty of $100 per ton. The fees have the potential to generate between $11 billion and $13 billion in revenue each year. That would be allocated to an IMO fund aimed at investing in the fuels and technologies essential for transitioning to green shipping, incentivizing low-emission vessels, and assisting developing nations to ensure they are not left behind with outdated ships and polluting fuels. The IMO, which regulates international shipping, has established a target for the sector to achieve net-zero greenhouse gas emissions by approximately 2050, and has pledged to promote the broader use of fuels that have zero or near-zero emissions.
Ships have the potential to reduce their emissions by adopting alternative fuels, utilizing electricity, or implementing onboard carbon capture technologies. Wind propulsion and other energy efficiency advancements can significantly contribute to reducing fuel consumption and emissions in the context of an energy transition. Large ships typically have a lifespan of approximately 25 years, indicating that the industry must initiate changes and investments at this time to achieve net-zero by around 2050. If adopted, the regulations will come into effect in 2027. According to the reports, large oceangoing ships exceeding 5,000 gross tonnage, responsible for 85 percent of total carbon emissions from international shipping, will face penalties for their emissions beginning in 2028. The International Chamber of Shipping, representing more than 80 percent of the global merchant fleet, is calling for adoption. Heavy fuel oil, liquefied natural gas, and biodiesel are expected to remain dominant throughout the 2030s and 2040s, unless the IMO takes further steps to incentivise green alternatives. “The way the rules are designed essentially makes biofuels the cheapest fuel to use to comply, but biofuels require huge amounts of crops, pushing out less profitable food production, often leading to additional land clearance and deforestation,” said Faig Abbasov. Abbasov emphasized the need for the IMO to advocate for scalable green alternatives, rather than irresponsibly endorsing biofuels derived from food crops. As it currently stands, the deal before the IMO will not achieve net-zero emissions by 2050, he added.
Green ammonia will get to a price that it’s appealing to ship owners in the late 2040s quite late in the transition, according to the modelling. The NGO recognizes that green methanol will be significant in the long-term transition. The IMO aims for consensus in decision-making, but it’s likely that nations will vote on adopting the regulations. At the April meeting, a vote was called to approve the contents of the regulations. The United States was notably absent in April; however, it plans to participate in this meeting. Teresa Bui expressed her optimism, stating that “global momentum is on our side” and that a majority of countries will support adoption. Bui serves as the senior climate campaign director for the environmental nonprofit, which holds consultative, or non-voting, status at the IMO. If it fails, the decarbonisation of shipping will face additional delays. Determining the exact consequences remains challenging, yet a failure this week will undoubtedly result in delays. This, in turn, will cause ships to emit more greenhouse gases than they otherwise would have, prolonging their significant role in the climate crisis, stated John Maggs.
