Shipping’s decarbonization

Shipping’s decarbonization –Words without actions in COP26 aftermath

Despite encouraging steps taken at COP26 Climate Summit in Glasgow to decarbonize the international shipping sector, governments failed to translate words into actions during climate talks at the International Maritime Organization (IMO) last week.

The 77th session of the IMO’s Marine Environment Protection Committee (MEPC 77) was held remotely from 22 to 26 November 2021. Although maritime industry stakeholders had high hopes for a policy of net zero by 2050, the envisaged scenario has not happened and might not happen in the next two years.

Namely, MEPC (only) agreed to initiate the revision of the strategy with the intent to have a revised IMO GHG Strategy adopted at MEPC 80 in spring 2023. Other MEPC 77 highlights included the adoption of a resolution urging for the use of distillates or other cleaner fuels or technologies to reduce emission of black carbon in or near the Arctic, and revised guidelines on exhaust gas cleaning systems. The lack of consensus among governments during MEPC 77 led to the IMO’s failure to take decisive action on the net-zero 2050 goal today and not tomorrow.

A call to action

The shipping industry itself has been united in calling for the UN regulator to support the need for carbon-neutral shipping by 2050 — compared to the current target of 50% reduction by 2050 — and align the industry to the Paris Agreement, a legally binding international treaty on climate change that aims to limit global warming to well below 2 degrees, preferably to 1.5 degrees Celsius, compared to pre-industrial levels.

Prior to COP26, a multi-stakeholder task force convened by the Getting to Zero Coalition with members from the entire maritime ecosystem developed the Call to Action. Together, they have urged governments and global shipping industry leaders to commit to de-

carbonizing global shipping by 2050. During COP26, a number of countries including Denmark, the United Kingdom, the United States, Germany and others have supported the Call to Action initiative and called on the IMO to introduce more ambitious climate goals for shipping by adopting climate-neutral shipping goal by 2050 as well as sub-goals by 2030 and 2040. $5 billion R&D fund

Key elements of international shipping’s net-zero goal have been the creation of a compulsory R&D fund to develop zero-carbon technologies and the development of a carbon levy for shipping to expedite the transition to more expensive zero-carbon fuels. The $5bn research and development fund was proposed by the International Chamber of Shipping. from the majority of governments attending MEPC 77 for the mandatory R&D contribution system to be passed, which would be funded by collecting $2 per tonne of marine fuel consumed by ships trading internationally.

However, there were divergent views on the industry proposal for the International Maritime Research Fund (IMRF) at MEPC 77. No decision was made at this session, and it is expected to be folded into the broader discussion of future regulations, with overall decisions to be made at MEPC 80.

“This (22-26 Nov) week’s meetings have missed the opportunity to take forward a range of GHG reduction measures which would accelerate the development of zero emissions ships that are urgently needed at scale to decarbonise our sector. It’s almost as if COP 26 never happened,” Guy Platten, ICS Secretary General, said, expressing his dissapointment with the MEPC 77 outcomes.

“Governments can’t keep kicking the can down the road; every delay moves us further away from reaching pressing climate goals.”

“We will continue to work with governments to agree to the suite of measures which the industry has proposed, including the 5 billion dollar R&D fund as an immediate step to be followed by a levy based carbon price for shipping. The adoption of both these measures will be the only way to deliver on net zero emissions from shipping by 2050 while ensuring an equitable transition that leaves no one behind.” The World Shipping Council (WSC) also shared its members’ disappointment with the lack of ‘real action’ at the IMO.

“Our appeal to political leaders and regulators is to not get stuck in a cycle of ambition bidding, but to take action for inclusive change in the shipping industry,” John Butler, President & CEO of World Shipping Council, pointed out.

“Whilst we are disappointed there was no decision, the MEPC 77 saw a notable increase in the number of nations supporting the establishment of an industry-financed research fund, pushing USD 5 billion into R&D towards zero-GHG technologies that will be available to all nations. The initiative is ready to launch, has support from the Green Climate Fund, and we will keep supporting member nations working for a positive resolution at MEPC 78,” he continued.

“Our challenge as a hard-to-abate sector is that the technology and fuels needed for a transition to zero are not yet available. We see the direction, and now need to drive progress towards a tipping point where the technologies for zero-GHG shipping can be applied and a clear demand picture can drive availability of and infrastructure for alternative fuels. That is why IMO member countries inexplicable

stalling around the IMRB/IMRF is so dangerous,” he continued.

The UK Chamber of Shipping also believes that governments from around the world should use the momentum of COP26 to deliver real change, particularly around zero.

“We were … disappointed by the MEPC’s failure to reach agreement on achieving net zero by 2050. We remain clear that urgent action is needed, and will continue to work with the government to push our case at forthcoming IMO,” the trade association said.

Time for the EU to step in?

In July 2021, the European Commission proposed to extend the scope of the EU’s Emissions Trading System (EU ETS) to cover CO2 emissions from ships.

This is one of several proposals that aim to make the EU ‘fit for 55’ and help deliver on the European Climate Law target to reduce greenhouse gas emissions in the EU by at least 55% by 2030, and enable climate neutrality by 2050, in line with the EU Green Deal. Under the plan, shipping would be added to the EU ETS gradually from 2023 and phased in over a three-year period. Shipowners will have to buy EU carbon permits for their pollution or else face possible bans from EU ports.

With this move, and with the recent lack of concrete action by the global shipping regulator, the EU has found itself in a position where it can lead the global climate action in shipping. However, the EU has been criticized by several shipping associations such as WSC because its actions threaten “to undermine broader international progress”. WSC earlier shared its optimism with intra-EU ETS and warned that the EU ETS reaching outside European borders makes it more difficult to establish global market-based measures.

Despite this, the EU is positioning itself as a frontrunner with the ability to drive the global policy effectively and help the industry to reach the net-zero target.

“Of course we want a global action but we believe that in the IMO not enough was achieved over the last period and we need to achieve more and do a lot better,” Frans Timmermans, Vice-President of the European Commission, explained during the European Parliament Side Event at COP26 – Carbon pricing in the European Union: an invitation to the world.

“I hope that the IMO and other international organizations … understand that the time is now to change their attitude and to work towards putting a fair price on carbon to decarbonize their industry. By putting a price on carbon, you make the business case for alternatives more interesting,” he concluded.

By Naida Hakirevic Prevljak