IMO MEPC must back $5bn R&D fund industry proposal next week

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Usually, it is the regulator pushing an industry to comply with new rules, fees, or similar, but in this case, it is the shipping industry that is pushing the IMO to implement a bunker levy to fund research and development into zero carbon fuels.

COP26 may, or may not, have been a whole load of “blah, blah, blah” as climate activist Greta Thunberg so eloquently put it, but it is clear that shipping and transport are increasingly in the spotlight and more aware general public expects goods to be transported in an environmentally friendly manner. It is also clear that both environmentalists, many governments, and significant portion of the shipping industry do not believe the IMO is acting fast enough on the transition to low or zero carbon emissions.

In such a context the proposal from a broad base of industry representative bodies for a $2 per tonne bunker levy to fund a $5bn International Maritime Research and Development (IRMB) would seem like a shoo-in. However, that has proved not be the case and 23 months after it was first proposed it languishes undecided on at shipping’s governing body.

This week has seen Bud Darr, EVP Maritime Policy and Government Affairs at MSC Group, calling for the immediate approval of the R&D fund, declaring “Let us pay” during a post COP26 webinar. The representative of one of the world’s largest shipowner/operator is not alone in his frustrations.

The reality is the discussion has already moved on while the IMO and its members dither and disagree. Much of the industry is now backing a goal of net zero emissions from shipping by 2050, double the IMO’s current ambitions. Yesterday Intertanko added its voice to this call, a strong statement when one considers that its members currently make their living from transporting fossil fuels.

At the same to we are seeing emissions trading schemes such as the European Union’s ETS being brought in to cover shipping regionally. The concern for the industry about such measures is their regional and therefore multiple, non-uniform nature, and what the money is actually going to be used for.

By contrast the $2 per tonne bunker levy for the R&D is very clearly going back into decarbonising the sector, and is level playing field globally in terms of additional cost

Given the 23 months that the R&D fund has sat on the table any imminent agreement by IMO members to agree a net zero target for 2050, which would cost anywhere between $100 – $160 per tonne to achieve depending on whose numbers you believe, is extremely unlikely.

However, if the MEPC backs the R&D fund next week it would show real intent that is more than just a symbolic target. The IMRF combined with existing initiatives such as the AP Moller Center for Decarbonisation and the Global Maritime Centre Decarbonisation would really see concrete steps to meeting the industry’s decarbonisation goals.

A failure to do so and the IMO will be left marginalised to regulate absolute base line measures such as the Energy Efficiency Existing Index (EEXI) and Carbon Intensity Index (CII) globally.   

The ball is very much in the MEPC’s court when it meets virtually next week.