With US president Biden’s sweeping commitment to emissions reduction putting shipping on notice, shipping associations look for market-based support schemes and a class society counsels owners to retrofit first and allow decarbonisation technologies and supply chains to mature
Shipping groups have published their own proposals on decarbonisation-related measures for the industry ahead of an Earth Day-scheduled ’Leaders’ Summit on Climate’ convened by US President Joe Biden.
With US announcements of sweeping commitments to emissions reductions that, in part, target international shipping, shipping bodies BIMCO, CLIA, International Chamber of Shipping, World Shipping Council and others have submitted an International Maritime Organization (IMO) proposal calling for decarbonisation to be incentivised.
"The world’s major shipping organisations have called on world leaders to urgently examine the role of market-based measures (MBMs) to ensure ambitious decarbonisation targets are met across the entire global shipping industry," a joint announcement from the shipping groups said.
"MBMs put a price on CO2 emissions to provide an economic incentive for a sector to reduce its emissions by narrowing the price gap between fossil fuels and zero-carbon fuels," the announcement said.
The industry bodies said their goal is for IMO members to begin consideration of market-based measures now so that "commercially viable" zero-carbon technologies and vessels can be developed.
"For a pricing signal to work, there must be viable alternatives to fossil fuels," the groups said. "These alternatives do not yet exist for large transoceanic ships.
Development of alternative technologies would be enabled by a massive acceleration of IMO co-ordinated R&D – to be financed by the industry – so that oceangoing ships will be able to switch to new fuels."
The shipping industry associations pointed to a US$5Bn proposal in front of IMO member states to fund research and development of decarbonisation technologies for the sector.
Calling for "fair and equitable" global application of any market-based incentives that are developed and avoidance of "unilateral" schemes with the example of the EU’s proposed expansion of its emissions trading scheme (ETS) to shipping, the groups cautioned that market incentives can be slow to materialise.
"As MBMs can take several years to develop and enter into force, implementation of MBMs and their incentivising impacts will only be able to coincide with the wider introduction of zero-carbon technologies if measures such as the industry-financed R&D fund proposal are approved," they said.
Class society ABS released its own report offering shipowners guidance on how and when to invest in the various decarbonisation technologies available to the industry now and in the future.
In the report, ABS said decarbonisation plans should form "the cornerstone" of shipowner business strategies and that the plans "must be designed to go beyond compliance".
However, the class society advised shipowners to make a relatively cautious, "staged transition" in adoption of decarbonisation tools onboard their fleets.
"A staged transition, with a focus on retrofitting existing vessels and fuel substitution, can offer valuable time for more aggressive deployment of decarbonisation technologies while allowing supply chains to become commercially available. At the same time, this can help to avoid early vessel retirement and asset depreciation, while also avoiding some technology selection risks," the ABS report said.
"This effort accelerates the transition and puts the sector at the centre of decarbonisation efforts by aligning with end-consumer concerns, as well as policy and regulations that could otherwise cause sudden and significant disruptions."
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