Shipping Industry Proposes Fund to Accelerate Net-Zero Transition

The International Chamber of Shipping (ICS) has submitted a comprehensive proposal to the UN International Maritime Organization (IMO), advocating for the creation of a Zero Emission Shipping Fund (ZESF). The proposal aims to accelerate the transition of the global commercial shipping fleet to net-zero emissions by 2050.

The plan, backed by shipowners worldwide, proposes mandatory contributions based on each ship’s greenhouse gas (GHG) emissions. This initiative could raise billions of dollars annually to support the maritime GHG reduction efforts, particularly in developing countries.

The ICS has advocated for economic measures designed accelerate the uptake of more expensive zero GHG fuels as they become available. In 2022, IMO member states rejected a proposal for a $5 billion IMO-supervised program, backed by the ICS and others, designed to accelerate research and development of low-carbon and zero-carbon fuels in shipping. The program would have been financed by a $2 per tonne tax on ship fuel over 10 years.

The updated proposal, co-sponsored by Bahamas and Liberia (two of the world’s largest flag State administrations), expands on Japan’s “feebate” concept and the EU States’ support for a flat rate “levy-based” global contribution system. The proposal also outlines a structure for transparency and accountability of the funds raised.

ICS Secretary General Guy Platten underscored the importance of global involvement in the transition to net-zero shipping.

“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,” said Platten.

The proposal will be reviewed by IMO Member States in their next round of GHG negotiations in March. Governments have already committed to developing a GHG pricing mechanism for international shipping by 2025. If approved, the ZESF will be instrumental in achieving net-zero GHG emissions from shipping by or close to 2050.

The proposal also suggests using contributions from ships per tonne of CO2e emitted to reduce the cost gap between zero GHG fuels and conventional fuel oil. This approach would provide financial rewards (“feebates”) to ships for the GHG emissions they prevent by using these new marine fuels.

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

An impact assessment conducted by Clarksons Research for ICS concluded that a contribution rate adding a cost between US$20 to $300 per tonne of fuel oil consumed would have no disproportionately negative impacts on national economies in terms of delivered cargo prices.

The Zero Emission Shipping Fund aims to support the shipping sector, currently heavily reliant on fossil fuels, in achieving a “take-off” point in its use of more expensive ‘green’ fuels like ammonia, hydrogen, sustainable biofuels, synthetic methanol, and synthetic LNG.

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