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Carbon price and clean fuel standards on agenda at IMO

Do not expect any agreement this week on what the greenhouse gas price element will be, says European Commission’s lead negotiator

After more than a decade of division, the IMO’s Marine & Environment Protection Committee this week considers a ‘basket of measures’ on carbon price and fuel standards agreed at an intersessional working group

A DEAL on marine fuel oil carbon pricing is not expected at this week’s International Maritime Organization meeting, according to a European Commission policy director and lead decarbonisation negotiator.

“We have to manage expectations. We are really building bridges here,” Petra Doubkova, who will lead European Union discussions at the IMO, told a forum in Brussels last week.

The IMO’s marine and environment protection committee is considering five proposals to cut greenhouse gas emissions alongside a range of technical measures when it meets virtually from June 6.

Last month, an IMO inter-sessional working group “agreed that a solution about how to decarbonise shipping should be a combination of the technical and the greenhouse gas pricing elements”, said Ms Doubkova. 

The acknowledgement such measures should be included in any medium-term strategy to cut carbon emissions was regarded as a breakthrough after more than a decade of division at the IMO.

“This is something we did not have in writing until now in such relatively strong form,” she said. “We will be asking the committee to approve that and give a clean line to further work on that type of basket of measures. This is a key achievement on that we hope to build on.

“At this stage, just to have the agreement that we will have a global greenhouse gas price and start working on that as part of a framework is extremely important from our perspective.”

The IMO targets set in 2018 are designed to reduce the carbon intensity of emissions by 40% by 2030 and cut greenhouse gas emissions by 50% by 2050.

There is now pressure from some countries to tighten these goals to achieve to zero emissions by 2050.

Where that leaves an industry-backed proposal for a $5bn decarbonisation research and development fund is uncertain.

Proposed by the International Chamber of Shipping in September 2021, the fund calls for a $2 per tonne levy on marine fuel oil. 

The levy is much lower than an alternative, more favourably considered proposal from the Marshall Islands, which has a $100 per tonne price.

A final decision on whether to “abandon or adopt” the industry-backed proposal will be made at this meeting, according to a briefing note from Lloyd’s Register.

“A carbon price is really closer than it has ever been before,” Environmental Defense Fund senior manager for EU transport Panos Spiliotis said at the Brussels forum. “You cannot decarbonise at the rate that is needed without it.”

Ms Doubkova said the EU would lobby the IMO to adopt standards for clean fuels at the meeting this week, which she believed was more important than setting a carbon price.

“That is similar work to what we are doing here in the EU with the FuelEU proposal,” she said. “We are not asking that from one day to another for a 50% lower GHG intensity of the fuels but to pave the way and start the gradual phase-in of the transition. That is even more important than having a certain amount of the carbon price, which does not directly or immediately lead to a fuel switch, though it does help. 

“It does send the right signal, but it does not guarantee that immediately you are going on the fuel transition, so the technical portfolio for the fuel position is actually much more important.”

As well as examining how best to measure lifecycle emissions, the committee will also look at India’s push for interim guidelines for biofuels produced from crops and biomass.

Blending biofuels into conventional fuel oils while renewably sourced alternatives were developed was needed, the country’s delegate said in a submission to the committee.

“India would like to request that efforts on the trials of biofuels as an alternate fuel be fast-tracked, through possible interim guidelines, pending a more comprehensive life-cycle assessment guidance,” the submission said.

The IMO will also consider a proposal to create the world’s fifth low-sulphur emission zone in the Mediterranean Sea.

This would mandate that vessels transiting the area use fuel oil with 0.01% sulphur, instead of the 0.5% permitted. Other so-called ‘Seca’ areas are in the Baltic Sea, Caribbean, North America and the Caribbean.

If approved, the regulatory amendments to establish the zone would be adopted at the next committee meeting in December.

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