INTEREST groups, scientists, observers, commentators and the Intergovernmental Panel on Climate Change are very clear on the matter: actions taken between now and 2030 will determine the extent of global warming and the severity of the impact of climate change.
In the recently released Synthesis Report of the IPCC Sixth Assessment Report (AR6), the IPCC makes the point that due to global warming, “Some future changes are unavoidable and/or irreversible but can be limited by deep, rapid and sustained global greenhouse gas emissions reduction” and that “All global modelled pathways that limit warming to 1.5°C … [or] 2°C … involve rapid and deep and, in most cases, immediate greenhouse gas emissions reductions in all sectors this decade.”
The challenge has always been an extremely difficult one, however the slow rate of progress over past decades has made the challenges of the future much more intense for all industries across all economies. As a hard-to-abate sector, the challenge for shipping is monumental.
TARGET PRACTICE
The upcoming 80th session of the International Maritime Organization’s Marine Environment Protection Committee (MEPC 80) will be a major milestone in the global shipping industry’s efforts to decarbonise.
With the historical and somewhat controversial entry into force in January this year of IMO’s package of short-term measures – the first meaningful foray into regulating greenhouse gas emissions from international shipping – the IMO is on a tight timeframe to put some meat on the bones and deliver on follow-up actions.
Revision of the IMO Initial Strategy, which was adopted in 2018, must be finalised at MEPC 80 in July. Unfortunately, member states remain polarised on some important matters, including the need for net zero or absolute zero emissions by the 2050 target, the feasibility of the industry achieving such a target, and whether or not targets should be set for the intervening period (2030 and 2040) to mark the necessary trajectory.
If we are serious about decarbonising our industry – and from MIAL’s perspective, we absolutely are – clear, transparent, and science-based targets that reflect the emissions reductions necessary to limit warming to below two degrees Celsius are an essential element of the policy framework that must be applied globally.
Without these targets it will be impossible to mobilise the massive amount of private investment that will be required to develop, scale up and deploy the low carbon fuels of today and the zero carbon fuels of the future.
FUND AND REWARD
Mechanisms to bridge the considerable price delta between conventional fossil fuels and low- and zero-carbon fuels will be another essential element of an effective policy framework.
This essentially boils down to pricing carbon and there is growing consensus that a global levy applied to bunker fuel per tonne of carbon dioxide emitted strikes the right balance between simplicity and economic efficiency – used in isolation, as long as the levy is set sufficiently high, the cost of emitting carbon will drive industry to seek out lower carbon options.
The International Chamber of Shipping, the international shipping industry representative body, has a well-defined position on a “fund and reward” mechanism that combines a relatively low levy with a reward for first movers.
This proposal has been submitted to IMO for consideration as a way to address the cost delta and incentivise transition, while minimising cost impact across the board. A recent ICS press release describes this position:
“In the new submission, ICS has set out details of how a mandatory flat rate (levy-based) contribution by ships will be collected by an IMO Maritime Sustainability Fund. Importantly, to achieve consensus among governments, ICS explains how the contribution by ships per tonne of CO2 emitted can be set by IMO at a relatively low level and still be sufficient to narrow the price gap between alternative and conventional fuels.
“The funds collected would be used to reward the uptake of alternative fuels by first movers, based on the CO2 emissions prevented, which will significantly reduce the price gap whilst minimising the additional cost of marine fuel to ensure that there will be no disproportionately negative impacts on trade, which is a legitimate concern among many developing economies.
“In addition to funding the rewards programme for the uptake of low and zero-carbon fuels the contributions by shipping companies will generate billions of dollars annually to support the production of alternative marine fuels in developing countries. The fund will also be available to de-risk the rollout of the new bunkering infrastructure that will be required on an accelerated timescale.”
Other important GHG emissions reduction matters will also be considered and progressed at MEPC 80, including the development of draft guidelines of lifecycle GHG intensity of marine fuels (LCA guidelines). The LCA guidelines will underpin integrity in low- and zero-carbon fuels development. They will also support carbon accounting and emissions reduction verification across the industry and will be instructive for new energy developers to demonstrate their lifecycle carbon emissions reduction potential to a very large potential offtake market.
Given the possibilities of our renewable energy resources, Australia is among a handful of nations and regions around the world with significant potential to generate the zero carbon fuels that will help decarbonise the global shipping industry. To realise this potential, we must enact the domestic policies that attract the private investment required in the way that the US government has through the US Inflation Reduction Act.
FORGING PARTNERSHIPS
The third MIAL Maritime Decarbonisation Summit, being held in Perth on 16 May 2023, will explore these issues through a local lens.
Speakers from organisations that are immersed in maritime decarbonisation programs, collaborations and advocacy will provide international and local perspectives on new energy generation and port infrastructure projects, the growing international collaborations on green corridors, shipping industry strategies and challenges towards carbon neutrality, impacts of the US Inflation Reduction Act and an update on Australian government consideration of actions to assist maritime decarbonisation.
Presenters include representatives from the Global Centre for Maritime Decarbonisation, Global Maritime Forum; Lloyd’s Register; Maersk Mc-Kinney Møller Center for Zero Carbon Shipping; CSIRO; Commonwealth Department of Infrastructure, Transport, Regional Development, Communications and the Arts; Pilbara Ports Authority; Deloitte; Svitzer; Rio Tinto; Blue Visby Solution; Neste; Vast Solar; H2Perth and Fortescue Metals Group.
There is only so much the shipping industry can do on its own. We need to collaborate and partner with energy and technology sectors, standard makers and regulators and importantly, we need the policy frameworks to work within that will drive the right outcomes.
This article appeared in the May 2023 edition of DCN Magazine
