Shipping Industry Proposes $5 Billion Program to Help Decarbonize Shipping

Photo: By Eric Gevaert / Shutterstock

The global shipping industry is urgently calling on governments to move forward on a proposal for a $5 billion industry-financed research and development program that would help accelerate zero-carbon fuels and technologies as the International Maritime Organization is finalizing its decarbonization strategy.

The proposal was put forth by a group of international shipowner associations whose membership collectively controls over 90% of the world merchant fleet. The call comes ahead of this week’s meeting of IMO’s Marine Environment Protection Committee (MEPC) to consider important next steps in the IMO’s initial strategy for reducing greenhouse emissions from maritime transport.

The 10-year, $5 billion program would be managed by an IMO-supervised non-governmental organization known as the “International Maritime Research and Development Board” and funded through a US $2 per tonne of marine fuel consumed by every ship.

Although total emissions from shipping are about 7% lower than in 2008, there is a limit to what can be achieved so long as ships remain dependent on fossil fuels and global demand for maritime services continues to grow, the group said in a joint statement.

The IMO in 2018 set out its ambition to reduce total emissions from international shipping by at least 50% by 2050 compared to 2008. But how the shipping industry will meet this goal is still to be determined.

Experts say it will require identifying and developing new zero-carbon technologies so that commercially viable zero-carbon ships can begin to operate in the 2030’s. While some potential solutions have been proposed, such as hydrogen or ammonia produced from renewable energy sources, these technologies needed do not yet exist in a scale or form that can be applied to large ocean-going ships. Also, a host of complex technical questions remain to be answered, including safety, storage, distribution, energy density considerations and lifecycle impacts.

“In short, we do not yet know what the fuels of the future will be,” said the joint statement.

The joint statement explained:

“The shipping industry has therefore proposed a USD 5 billion R&D programme, to be overseen by IMO and financed through a required R&D contribution of USD 2 per tonne of marine fuel consumed. The R&D programme would be managed through a non-governmental research and development organisation – an International Maritime Research and Development Board or IMRB.  The co-sponsors emphasize that for the proposal to work, the R&D contributions need to be compulsory via an IMO regulation, to ensure that all shipping companies globally contribute, in a fair and equitable manner, and that the necessary funds will be generated to achieve the programme’s objectives,” the statement said.

The international shipowner associations backing the proposal include BIMCO, Cruise Lines International Association, INTERCARGO, INTERFERRY, International Chamber of Shipping, INTERTANKO, International Parcel Tankers Association and the World Shipping Council.

According to the group, a number of governments have already shown interest in the program, subject to addressing issues such as governance.

“The Industry is eager to work with governments to ensure that this initiative is implemented as soon as possible and calls on the IMO Marine Environment Protection Committee to support the development of the IMRB concept at its critical meeting starting November 16th. The IMO 2050 climate targets can only be achieved with the immediate acceleration of zero-carbon fuels and technologies, and the IMRB is a crucial vehicle for driving the progress needed to build a zero-carbon shipping industry,” the joint statement said.

“The only way we will decarbonize deep-sea shipping is through identifying and developing the fuels of the future. We have no time to waste, and the IMRB is a proposal that allows us to begin now,” says John Butler, CEO of World Shipping Council.

Highlights of the International Maritime Research and Development Board (IMRB) proposal, as outlined by the trade groups, are as follows:

• The IMRB would be quasi-independent, subject to IMO Oversight, with the sole duty to accelerate the research and development of low-carbon and zero-carbon fuels, energy sources, propulsion systems and other new GHG reduction technologies, operating under a Charter approved by the IMO.
• An International Maritime Research Fund (IMRF) would provide industry financing for the IMRB research and development programmes, collecting about USD 5 billion over a ten-year period via contributions of USD 2 per tonne of fuel consumed by every ship.
• Other relevant stakeholders such as energy suppliers, technology companies, research and development institutions and foundations would be welcome to participate and contribute to the International Maritime Research Board and its work.
• The IMRB is designed to work itself out of a job in 10-15 years by delivering research and development projects that will then allow commercial entities to provide the technologies and services that will move proven technologies into the global fleet by the 2030s, so that the IMO target for 2050 can be achieved.
• The shipping industry organisations behind the proposal emphasise that the USD 2 contribution is not to be seen as a market-based CO2 reduction measure as it would only exist for a defined technical purpose – the acceleration of R&D for zero-carbon propulsion systems.

The proposal comes as the IMO’s Marine Environment Protection Committee (MEPC) is planned to meet virtually for its 75th session this week to discuss crucial measures to further reduce greenhouse gas (GHG) emissions from ships. Among other items, the MEPC is expected to adopt amendments to the International Convention for the Prevention of Pollution from Ships (MARPOL) to significantly strengthen the “phase 3” requirements of the Energy Efficiency Design Index (EEDI) – meaning that new ships built from 2022 will have to be significantly more energy-efficient. The MEPC will also discuss draft proposed amendments to MARPOL on short-term measures to reduce the carbon intensity of shipping with the aim of adding further energy efficiency requirements which would also apply to existing ships.

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