IMO debate: ICS calls for quick government action on GHGs; Pacific Islands want US$150/tonne CO2 levy

ICS said it has no view on what the GHG fee should be, which would depend on the reward rate agreed per tonne of GHG emissions prevented by the use, by ships, of zero/near-zero GHG energy sources. But the group said, if, for the first five years of implementation, IMO sets the reward rate at about US$100 per tonne of CO2-equivalent prevented – including upstream emissions, a GHG fee initially equivalent to about US$60 per tonne of conventional fuel oil consumed by ships could be sufficient. 

Secretary general Guy Platten stressed governments should ‘bite the bullet’ and take the plunge. “Unless a distinct GHG pricing mechanism and feebate programme are included in the IMO regulations adopted next year, we genuinely fear shipping’s transition to net zero by or around 2050 will be unlikely to succeed,” he said. 

While industry estimates peg about 20% of the operational fleet by 2030 to be capable of burning green fuel, those fuels are likely to be in short supply. 

ICS’ proposed mechanism aims to accelerate the production and uptake of new green marine fuels by reducing their cost disadvantage, with feebates (money-based incentives) being disbursed to ships for the emissions prevented by not using conventional fuel oil. 

If enacted, the fees from ICS’ plan will be collected, and rebates disbursed, via a web-based automated IMO mechanism, a prototype for which ICS has already developed and submitted to IMO.

From the revenue generated from the GHG fee, an amount equivalent to 20% of the revenue allocated to support the feebate programme will be transferred annually to the newly proposed IMO Net Zero Shipping Fund, with this proportion subject to adjustment within five years of entry to force.   

In the view of ICS, a maritime GHG emissions pricing mechanism means all ships should contribute GHG fees equally on the basis of their actual GHG emissions, consistent with fair competition and the ‘polluter pays’ principle. And ICS Secretary General Guy Platten said that governments need to "bite the bullet" and adopt its pricing proposal by 2025 for implementation in 2027. Mr Platten noted that without the mechanisms they propose, the group "genuinely fear that shipping’s transition to net zero by or around 2050 will be unlikely to succeed."

In a separate proposal submitted to IMO, Pacific islands are pushing for a higher greenhouse gas emissions price and simple fuel standard. The 6PAC+ Alliance of Small Island Developing States has submitted a series of proposed measures to IMO, saying they are aligning with the scientific assessment from IMO’s GHG impact review. 

The 6PAC+ alliance’s submissions to IMO highlight the necessity of combining technical measures with GHG pricing mechanisms to meet these targets. They propose a universal mandatory levy on all GHG emissions, coupled with a simplified global fuel standard (GFS). This combination is designed to promote the energy transition within the shipping industry, provide essential incentives, and ensure a level playing field and a just and equitable transition for all.
UNCTAD’s new report estimates a US$150-300/tonne price on shipping’s carbon would raise up to US$127Bn per annum between 2027-2030.
“When we first called for a levy in 2020, everyone said it was too hard to do. When proposed an entry price of US$100/tonne they said it was far too high. When they delayed and we revised the figures and raised the price to US$150/tonne last year, they all raised their eyebrows. But, as it turns out, we are fully aligned with the science,” said Permanent Secretary for Infrastructure in the Solomon Islands Allan Lillia.

"With the science now in from the IMO’s comprehensive impact assessment, the evidence is that a levy and simple GFS with a high entry price is no more costly than any other proposal and the only measures combination that can effectively deliver the levels of efficiency and equity needed," the proposal said.

With shipping emissions expected to rise significantly due to increasing global trade, the 6PAC+ alliance, initially led by six Pacific countries, has been pivotal in advocating for high ambition targets, including a GHG price on shipping emissions.

"The 6PAC+ alliance is committed to ensuring that the transition towards green shipping practices takes the most effective and lowest cost pathway and delivers a just and equitable solution, particularly for those on the frontline of climate impacts," Marshall Islands Special Envoy For Maritime Decarbonization Albon Ishoda said.

The latest proposals from the Pacific Islands as well as those from the Bahamas, Liberia and ICS and many others will be discussed at the next round of IMO negotiations, which resume in London on 23 September, to develop a new package of mid-term GHG reduction regulations for international shipping, for adoption by governments.

Riviera’s Maritime Decarbonisation Conference, Europe 2024 will be held in Amsterdam, 24-25 September 2024. Click here for more information on this industry-leading event.