The International Chamber of Shipping (ICS) has submitted a detailed proposal to the International Maritime Organization (IMO) for a Zero Emission Shipping Fund (ZESF).
In acknowledgment of the importance of moving forward with feasible solutions to fulfil net zero objectives, shipowners globally have agreed to mandatory payments on ships’ greenhouse gas (GHG) emissions that will raise billions of dollars annually.
According to ICS, the purpose is to accelerate the transition by the global commercial shipping fleet to net zero emissions by 2050 and support the maritime GHG reduction efforts of developing countries.
The shipping industry’s updated proposal is co-sponsored by the Bahamas and Liberia. The proposal reportedly builds on the ‘feebate’ concept proposed by the Japanese government, as well as backing from EU States at the IMO for a flat rate ‘levy-based’ global contribution system.
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Significantly, the amended proposal includes a structure for transparency and accountability in how the billions of dollars raised would be spent, including funding for developing countries.
ICS revealed that IMO Member States would evaluate the ZESF and the ‘feebate’ mechanism during their next round of GHG negotiations in March.
Governments have already unanimously agreed to create a GHG price mechanism for international shipping by 2025.
If governments agree, the ZESF will be authorised next year to help achieve net zero GHG emissions from shipping by or around 2050, in accordance with the IMO Member States’ ambitious GHG reduction ambitions.
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According to the proposal, payments from ships per tonne of CO2e released will be utilised to close the considerable cost difference between zero GHG fuels and conventional fuel oil, offering financial rewards (feebate) to ships for the GHG emissions avoided by using these new marine fuels.
Clarksons Research has reportedly conducted a detailed impact assessment for ICS, which demonstrates that a contribution rate that adds a cost ranging from $20 to $300 per tonne of fuel oil consumed would have no disproportionately negative effects on national economies in terms of delivered cargo prices.
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Guy Platten, ICS Secretary General, said: “A global GHG pricing mechanism for shipping urgently needs to be agreed on next year, which will de-risk investment in zero GHG marine fuels and provide billions of dollars of funds to support developing countries.
“The first IMO target for 2030 is less than six years away. If we don’t achieve a take-off point in the production and uptake of zero GHG marine fuels by 2030, it’s hard to see how net zero will be achieved by 2050.”
