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From the News Desk: Disappointment at slow pace of IMO green progress

The International Maritime Organization has approved new emissions measures for ships, but many stakeholders made it clear the plan is not ambitious enough

A new short-term hybrid technical and operational measure, which will see new energy efficiency requirements from 2023 and mandatory carbon intensity targets from 2026, was approved by the International Maritime Organization’s Marine Environment Protection Committee last week

AGREEMENT by maritime regulators about a new short-term greenhouse gas emissions cutting measure will bring official regulation one step closer, but the proposal once again exposed the stark divide on the best approach to tackle shipping’s decarbonisation dilemma.

The MEPC-approved measure demands energy efficiency requirements on existing ships starting from 2023 and will introduce carbon intensity targets for vessels, which will be calculated based on guidelines the International Maritime Organization develops in the future and would only become mandatory in 2026.

It also creates a rating system for the carbon intensity performance of individual vessels and would require ships with poor ratings to develop corrective plans.

Governments had previously scrapped an original proposal for poorly rated ships to lose their state of compliance. The deletion raised worries about the potential for adequate enforcement of the measure.

But that was not the only concern, with governments acknowledging a number of shortcomings in terms of the strength and pace of the new measure.

The Marshall Islands, the Solomon Islands and Tuvalu rejected the proposed measures, while Greece said the approval has the “full and unequivocal consent” of its delegation.

Japan, which recently committed to becoming a net-zero emitter by 2050, fully supported the approval of the measures and noted they are the first step towards the decarbonisation of shipping. China said the combined measure is fair and practicable, while taking into account the features of international shipping and different interests of countries.

The main point of conjecture is how quickly IMO members move to discussion on the medium to long-term issue of market-based measures, such as a bunker levy or a carbon tax.

The IMO agreed in 2018 to begin negotiating mid-term measures, including MBMs, from 2023 to 2030, though it recognised that some work on some will need to start before 2023. Discussion on long-term measures, such as the development and provision of zero-emissions fuels, would start in 2030.

But amid a growing sense of urgency for more rapid action on emissions and following vocal disappointment in the ambition of the approved short-term measure, some countries are demanding negotiations and planning on these measures and the strategy revision to begin as soon as possible.

Maersk, the word’s biggest shipping company, was among those to express its disappointment at the short-term measure and has called for talks on MBMs to start as early as next year.

“While Maersk remains disappointed with the level of ambition shown at IMO, we are happy to see that many IMO member states share this disappointment and called for the needed technical work on short-term measures to secure actual emissions reductions,” said Henriette Hallberg Thygesen, a member of Maersk’s executive board and chief executive of Maersk fleet and strategic brands, in a statement to Lloyd’s List.

“2021 must become a pivotal year for IMO, it cannot be another missed opportunity — we call on the member states to ensure 2021 shows solid progress on discussing long-term measures and market-based measures,” she added.

The MEPC meeting also included the first-ever IMO discussion on an industry proposal for a $5bn research and development fund to help develop alternative fuels for the maritime sector.

Backed by eight of the biggest industry associations, the proposal seeks to impose a mandatory levy of $2 per tonne of fuel consumed by ships to fund research and development projects by raising an estimated $500m annually and $5bn over 10 years.

The funds would be administered by an autonomous organisation, to be called the International Maritime Research and Development Board. The eight groups hope to have the organisation up and running by 2023.

The initial response from governments was predictably mixed, with many EU countries generally supportive but raising questions about governance and end goals, while China said the proposal is not mature enough in its current form to earn its support.

It is clear that there is increasing urgency for the IMO to offer some clarity on its medium and long-term measures to cut GHG emissions so that owners have the confidence to invest in next-generation vessels, as outlined in a report by ship brokerage Gibson.

It backs the introduction of carbon pricing as an incentive for shipping to start taking on green technologies. Zero-emission, or low-carbon fuels will not make financial sense without some form of incentive for shipping companies as hydrocarbon-based fuel products remain relatively cheap, Gibson argues.

Another important issue is the use of liquified natural gas as a transitional marine fuel in the sector’s battle against climate change. “What the industry needs right now is clarity as to where LNG sits within the IMO’s climate goals and the likely shape and form of its medium and long-term goals,” said the brokerage.

Meanwhile, the latest Lloyd’s List Shipping Podcast looks at another potential transitional fuel for shipping — liquefied petroleum gas.

BW has pioneered dual-fuelled LPG engines and recently announced a world first with a very large gas carrier voyage on full LPG propulsion across the Pacific Ocean. It is a voyage expected to produce 20% less greenhouse gas emissions and use 10% less fuel. BW’s technology and operations chief Pontus Berg joins our reporter Inderpreet Walia to offer a fresh look at LPG.

Decarbonisation survey and Outlook poll

Despite decarbonisation dominating industry debate, regulatory and market uncertainty is keeping a lid on newbuilding investments and slowing strategic planning.

As part of a wider project to add some much-needed transparency to shipping market dynamics, Lloyd’s List has teamed up with classification society Lloyd’s Register to launch a regular Decarbonisation Survey.

By charting the industry’s position on alternative fuels, investment and financing, the survey will start to reveal a uniquely independent view of the industry’s shift towards low and zero-carbon fuels.

To take the survey and add your voice to the debate, please follow this link.

The initial results of the survey will be presented and discussed at the Lloyd’s List Shipping Outlook Forum 2021 on December 1.

We also invite you to get involved in this event by participating in our online poll. It covers 10 questions on the key issues facing shipping, the results of which will be put to our expert panel of industry leading lights and Lloyd’s List and Lloyd’s List Intelligence experts.

To take part in the poll, please follow this link. To register for the event, please select the link in the banner below.

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