Net-Zero Framework: giant leap of faith or commercial suicide?

With the stage set for a potential vote to approve the International Maritime Organization’s (IMO) Net-Zero Framework (NZF), some of the world’s most influential maritime stakeholders are calling for the industry to pump the brakes. The latest to voice their concern is a group of prominent Greek and Cypriot shipowners, who warned that the current pace of international regulation prioritises taxation over real progress on reducing ship emissions.

Speaking during a session at Maritime Cyprus in early October, Dynacom Tankers Management chairman, George Procopiou, said measures should be “doable, not desirable.” He pointed to operational and technical measures such as slow steaming, energy efficiency and carbon capture technology.

While saying the company is committed to decarbonisation, Diana Shipping chief executive, Semiramis Paliou, observed that shipping needed more clarity and noted that its share of global greenhouse gas emissions is small and additional costs levied on shipping would eventually be passed onto consumers.

Adding his concerns to those of the panellists, Cyprus minister of energy, commerce and industry, Giorgos Papanastasiou, was critical of Europe’s Green Deal, noting that it was well-intentioned, but at times surpassed technological capability, impacting competitiveness across industries. Mr Papanastasiou made the case for an all-of-the-above European energy policy to ensure energy security.

“Energy and competitiveness go hand in hand,” he said, warning that transitions made without viable alternatives risk deepening inequality.

And DNV Maritime chief executive, Knut Ørbeck-Nilssen, has called for “pragmatism” in the pursuit of decarbonisation, including the pathway that starts with LNG and transitions to biomethane later. This is particularly important in the face of investments made in LNG-powered ships, infrastructure and supply.

“That’s quite a big statement to make from one of the world’s largest class societies”

Even more surprising was ABS chairman and chief executive, Christopher Wiernicki’s call during London International Shipping Week for IMO “to take a timeout” on its net-zero framework. Noting the dearth of zero- and near-zero carbon fuels available to shipping, Mr Wiernicki said LNG and biofuels are “mission-critical” to net zero and should not be penalised or discarded. He concluded that without a clear path to green fuels “achieving net zero for shipping by 2050 looks like a wildcard”. That’s quite a big statement to make from one of the world’s largest class societies.

Looming large over shipping are the threats by the Trump Administration to defeat the NZF which it said is “a global carbon tax on Americans levied by an unaccountable UN organisation.” The administration has warned IMO members that vote for the NZF would face retaliatory action.

But leading shipowning and maritime organisations are steadfast, continuing to back the adoption of the NZF. The International Chamber of Shipping, Asian Shipowners’ Association, European Shipowners, International Association of Ports and Harbors, International Bunker Association, World Shipping Council and International Transport Workers’ Federation jointly issued a press release to reiterate their strong support for adoption.

But is the Net-Zero Framework forcing the global shipping community to take a giant leap of faith by committing to use alternative fuels that are less energy dense and don’t exist? Additionally, shipping must trust IMO, a UN regulatory body, to levy and collect a global carbon tax - estimated at US$10Bn to US$15Bn annually - and reinvest that revenue into green fuels and technologies. Without clarity on zero and near-zero fuels and how this fund will be administered, shipping’s giant leap of faith could well be commercial suicide.