International shipping organisations and market participants mostly support the global greenhouse gas (GHG) pricing mechanism approved today at the International Maritime Organization's (IMO) 83rd Marine Environment Protection Committee (MEPC) meeting, but some raised concerns.
The structure approved by the IMO establishes that ships must reduce their fuel intensity by a "base target" of 4pc in 2028 against 93.3 gCO2e/MJ, the latter representing the average GHG fuel intensity value of international shipping in 2008. Emissions above this target will be charged at $380/tCO2e.
The levels defined by the approved regulation are achievable, according to a market participant, who said the gradually increasing targets may allow the market to properly adapt to the transition.
The International Chamber of Shipping (ICS) secretary general Guy Platten said the sector is already investing billions of dollars in 'green' technology, so the agreement gives certainty that sustainable marine fuels producers need.
"The world's governments have now come forward with a comprehensive agreement which, although not perfect in every respect, we very much hope will be formally adopted later this year," he said.
The European Shipowners (ECSA) secretary general Sotiris Raptis agreed the draft "is not perfect", but he celebrated progress towards a net zero emissions target, saying "it is a good starting point for further work" and pointing out that it may ensure the necessary investment in production of clean fuels.
During a press briefing, IMO secretary general Arsenio Dominguez said ships operating in international waters will be obliged to comply with the regulations after adoption, despite the US' refusal to engage with the discussions. Adoption of the pricing mechanism will be discussed and voted on in October.
Offering a counterview, the Global Maritime Forum said the agreed measures may not be strong enough to reach IMO targets.
"The GHG intensity targets create uncertainty as to whether the strategy's emissions reduction checkpoints for 2030 and 2040 will be met," it said. "As currently designed, measures are unlikely to be sufficient to incentivise the rapid development of e-fuels such as e-ammonia or e-methanol, which will be needed in the long run due to their scalability and emission reduction potential."
It said that failure to invest in these fuels would put at risk the target of at least 5pc zero- and near-zero emission fuel use by 2030 and the industry's entire 2050 net-zero goal.
The World Shipping Council's vice president Bryan Wood-Thomas praised the agreement and said one benefit of it is the pricing system that is "more aggressive" if a vessel fails to meet the GHG intensity standard.
"But you also have a fee system that gives investors more confidence in actual revenue [from using cleaner fuels]," he said.
The Brazilian representative told Argus the fact that some countries thought the agreement was too ambitious while others indicated it was not ambitious enough show the group may have reached a balance that can be possible to comply.
About the Brazilian position, the representative said the country "was never against an agreement".
"We were only against some aspects of the agreement, and we think that the membership has heard our concerns, and that's why we ended up pretty happy with the results", he said. Brazil voted in favour of the agreement today.
