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BIMCO addresses $5bn fund ‘misunderstandings’

One of the eight shipping associations, which backs the proposed $5bn fund, responds to the negative reception of the suggested mandatory payment level

The association emphasises that the $2 fuel oil mandatory payment is not meant to be a market-based measure to slash emissions, but rather a fundraising policy

BIMCO has responded to what it sees as ‘misunderstandings’ concerning a new industry-wide proposal for the creation of a $5bn international fund to help finance maritime decarbonisation research and development.

Shipping’s biggest associations, including BIMCO, have table a proposal for an independent research and development body, known as IMRB, backed by a mandatory $2 per tonne of fuel oil payment from shipping companies.

The associations had sought to differentiate their fund proposal from a market-based measure to curb emissions. They clarified in their proposal that it is not meant to delay the introduction of a potential market-based measure and even suggested that it could offer the blueprint for its eventual development.

Since the unveiling of the proposal earlier this week, however, congratulatory messages have also come with the focus on the value of the mandatory $2 payment.

Trafigura said that the $2 is unlikely to be enough to incentivise change in the industry to change operations and environmental NGOs also pointed out it is about 40 times lower than the current carbon trading prices in the European Union.

BIMCO deputy secretary-general Lars Robert Pedersen has sought to reiterate that the $2 is solely purposed for this R&D endeavour.

“We fully agree that the $2 per tonne of fuel is way too small to act as an incentive to change behaviour in the industry,” he told Lloyd’s List. “This is why the IMRB proposal is not a market-based measure, or carbon price if you like.”

Instead, it is a contribution by all industry players to the joint effort of making available the solutions which can decarbonise the industry, he added.

Mr Pedersen said uptake of these solutions may well be an issue when they become available simply because they will be expensive.

“A future carbon price may thus be needed to drive uptake and we agree that such a measure will likely require a much higher price tag,” he said.

IMO members will consider a market-based measure as a potential “mid-term measure", according to the agreed implementation timeline of the initial greenhouse gas strategy. Mid-term measures are those that would be finalised and agreed sometime between 2023 and 2030.

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