THE INTERNATIONAL Chamber of Shipping, in collaboration with the governments of Bahamas and Liberia, has presented a new proposal to introduce a greenhouse gas emissions fee for vessels.
The comprehensive proposal aims to ensure delivery of the “ambitious” UN International Maritime Organization (IMO) target of net-zero GHG emissions by or around 2050.
The GHG fee would be charged to ships per tonne of CO2 equivalent emitted, combined with a “feebate” mechanism to incentivise production of zero or low-emissions marine fuels, such as green ammonia, hydrogen, and methanol, as well as onboard carbon-capture technologies.
The proposal further states that approximately US$2.5 billion per year would be allocated an “IMO Net Zero Shipping Fund” to support emissions reductions in developing countries.
The ICS says it takes no view on the quantum of what the GHG fee should be, as this would depend on the reward rate agreed per tonne of GHG emissions prevented by the use, by ships, of zero or low GHG energy sources.
The ICS says if the IMO sets the reward rate at around US$100 per tonne of CO2 emissions prevented (including upstream emissions) for the first five years, the proposal suggests that an initial fee equivalent to US$60 per tonne of conventional fuel oil consumed by ships could be sufficient to achieve the purposes of the measure.
ICS secretary general Guy Platten remarked that a GHG pricing mechanism using a flat rate GHG fee and a feebate element is vital to bring about the rapid development and uptake of green marine fuels.
“To incentivise the production and use of green marine fuels our proposal includes a carefully thought out feebate mechanism, which is fuel neutral, to incentivise prevention of up to 100 million tonnes of GHG emissions per year during the first five years,” Mr Platten said.
“It is time for governments ‘bite the bullet’. Unless a distinct GHG pricing mechanism and feebate programme are included in the IMO regulations adopted next year, we genuinely fear that shipping’s transition to net zero by or around 2050 will be unlikely to succeed.”
The ICS says GHG fees will be collected, and feebates disbursed, via a web-based automated IMO “mechanism”, the prototype for which ICS has already developed and submitted to IMO.
Simon Bennett, deputy secretary general of the ICS, said failure to agree on a flat rate GHG fee applicable to all ships globally would lead to piecemeal, unilateral charges, resulting in regulatory chaos, economic inefficiency, disruption to seabourne trade, and damage to the IMO’s authority as shipping’s global regulator.
“In the view of ICS, a maritime GHG emission 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,” Mr Bennett said.
The latest proposal 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 regulations for international shipping, for adoption by governments in 2025.
