Groups Submit Net-Zero Shipping Fund to UN Marine Organization

aerial view of a shipping vessel on dark water

(Credit: Unsplash)

by | Feb 6, 2024

The International Chamber of Shipping (ICS), the Bahamas, and Liberia are taking action against emissions in the shipping sector. 

The trio has submitted a detailed proposal to the United Nations International Maritime Organization (IMO) to create a zero-emission shipping fund (ZESF) to transition to net zero by 2050. The fund aims to provide billions of dollars to support the transition in developing countries and incentivize accelerated production and uptake of zero greenhouse gas marine fuels and technologies.

The proposal is co-sponsored by Bahamas and Liberia, “two of the world’s largest flag state administrations, measured in gross tonnage,” the ICS said. The proposal specifically builds on the feebate model, which imposes a fee on high carbon emissions or fuel consumption. The concept was put forward by Japan and it is supported by European Union states at IMO for a flat rate “levy-based” global contribution system.

IMO member states will consider the fund and the feebate model at their next round of greenhouse gas negotiations in March. 

“The transition to net zero shipping must be truly global,” Guy Platten, ICS secretary general, said in a statement. “Otherwise, it will not succeed. ICS fully supports the net zero goal which IMO has agreed for shipping. The 2050 goal will only remain plausible if government negotiators now roll up their sleeves to develop the regulations needed to establish the Zero Emission Shipping Fund. 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.”

Pricing for Shipping Emissions

The proposal comes as governments are already working on developing a greenhouse gas pricing mechanism for international shipping by 2025. The ZESF will be approved next year if governments agree, with the aim of net-zero emissions by 2050. That’s aligned with the greenhouse gas reduction goals of most IMO members.

Namely, the fund model would use contributions from ships per ton of carbon dioxide equivalent emitted to reduce the significant cost gap between zero greenhouse gas fuels and conventional fuel oil. The feebates would be provided to ships for the emissions prevented by the use of these new marine fuels.

The proposal also includes support for the production of zero/near-zero marine fuels, new bunkering infrastructure in developing countries’ ports worldwide, and training in the safe use of new fuels. 

The proposal also includes a detailed impact assessment by Clarksons Research for ICS. The assessment found no disproportionately negative impacts on national economies in terms of delivered cargo prices for a contribution rate in a range between $20 to $300 per ton of fuel oil consumed. Generating $5 billion to $10 billion per year would require a contribution by ships to the fund between $20 and $40 per ton of fuel oil consumed, ICS found.

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