BusinessDay

Chamber proposes global CO2 reduction fund to reward ships

To hasten the maritime sector’s transition to net zero, the International Chamber of Shipping (ICS) has proposed financial rewards to ships and energy producers that invest in low-emission fuels.

In a paper to the International Maritime Organization (IMO), ICS proposes a ‘fund and reward’ system to catalyse the adoption of alternative fuels, which currently cost at least two or three times more than conventional marine fuel.

The proposal combines various recent GHG reduction proposals from a number of governments, plus a flat rate contribution system previously proposed by ICS and INTERCARGO, and ideas recently put forward for a global IMO measure by the EU 27.

Emanuele Grimaldi, chairman of ICS, said the fund will enable IMO member states to have a new opportunity to put in place a global economic measure that can kick-start the development and production of alternative fuels for shipping.

“These new fuels must start to become available in significant quantities on a commercial basis no later than 2030. Compromise is always difficult but, a proposal like this can enable everyone to come together. I hope this proposal will act as a bridge between the climates ambitions of both developed and developing countries so that no part of the global shipping industry will be left behind,” Grimaldi said.

ICS said the ‘fund and reward’ system could be established by 2024 if governments can agree on the regulatory framework at the IMO.

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It said the reward rate would be calculated based on CO2 emissions prevented and funded via a mandatory flat rate contribution from ships per ton of CO2 emitted.

ICS proposes that contributions from the global fleet be gathered in an ‘International Maritime Sustainability Fund’. Such a fund, the body said, could raise billions of dollars annually, which would then be committed both to narrowing the price gap, globally, between existing high-carbon marine fuels and alternative fuels, as well as supporting much-needed investment in developing nations for the production of new marine fuels and bunkering infrastructure.

The fund would reward ships according to annual reporting of the CO2 emissions prevented by the use of ‘eligible alternative fuels’.

For example, a ship powered by ammonia could receive a cost saving of more than $1.5 million annually.

Coming ahead of COP 27, the proposal is relevant as the total CO2 emissions from international shipping account for between 2 and 3 percent of the world economy’s total greenhouse gas emissions.

Guy Platten, secretary general of ICS said: “We must narrow the significant price gap of new, costly, alternative fuels to accelerate their production and take-up, so we can reach a take-off point by 2030 on our pathway to net zero by 2050. But it is crucial that our industry also supports maritime greenhouse gas reduction efforts in developing countries.”

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