Ahead of US President Joe Biden’s Leaders’ Summit on Climate, the world’s major shipping organisations have called on world leaders to urgently examine the role of market-based measures (MBMs), in order to ensure ambitious decarbonisation targets are met, across the entire global shipping industry.
With the summit, hosted by the United States of America (USA), seen as a vital precursor to COP26 and the IMO’s Marine Environment Protection Committee (MEPC), shipping bodies want leaders to put their political weight behind the industry’s desire, to eliminate the 2% of all global CO2 that the sector emits.
Shipping bodies urge to bring forward talks on MBMs
Global shipping bodies, including BIMCO, CLIA, International Chamber of Shipping, World Shipping Council, along with other industry groups, have submitted a proposal to the International Maritime Organization (IMO), calling for the UN’s regulatory body to bring forward discussions around market-based measure - MBMs, by several years.
These measures will be critical to incentivise the transition of the global fleet to new fuels and technologies, which will be more expensive than those in use today.
Market-based measures put a price on CO2 emissions
Shipping leaders believe that now is the time for the IMO member states to consider the role of MBMs
Market-based measures put a price on CO2 emissions, to provide an economic incentive for a sector to reduce its emissions, by narrowing the price gap between fossil fuels and zero-carbon fuels.
Shipping leaders believe that now is the time for the IMO member states to consider the role of MBMs, so that measures can be developed and implemented, to facilitate the adoption of zero-carbon technologies and commercially viable zero-carbon ships.
Need to develop Alternative technologies
For a pricing signal to work, there must be viable alternatives to fossil fuels. These alternatives do not yet exist for large trans-oceanic ships. Development of alternative technologies would be enabled by a massive acceleration of IMO co-ordinated R&D, to be financed by the industry - so that ocean-going ships will be able to switch to new fuels.
To this end, IMO member states and the maritime industry have already put forward a mature proposal to create a US$ 5 billion fund, to provide the research and development needed to create the technologies to decarbonise the sector. Industry leaders have also reiterated their call for nations to support this R&D proposal, at the IMO.
Pushing global economies to accelerate applied R&D efforts
The growing need for the consideration of MBMs at the global level, along with accelerated research and development, is too urgent to ignore. The industry bodies set out in their submission to the UN, stating “The ability to consider different candidate measures, in parallel, will be critical if (we are) to move forward with the urgency that the challenge of decarbonising shipping requires, given the urgent need to make progress on delivering (our) levels of ambition.”
The industry is encouraging the world’s largest economies to expand and accelerate applied R&D efforts
In alignment with shipping’s strategy to reach decarbonisation targets already set by governments, the industry is encouraging the world’s largest economies to expand and accelerate applied research and development (R&D) efforts.
As MBMs can take several years to develop and enter into force, implementation of MBMs and their incentivising impacts will only be able to coincide with the wider introduction of zero-carbon technologies, if measures, such as the industry-financed R&D fund proposal are approved.
Call for fair and equitable MBMs
The shipping groups are calling for any MBM to be applied in a fair and equitable way. They echo concerns that have been raised over unilateral carbon pricing schemes, such as the European Union’s proposed expansion of its ETS, which is seen by some observers as a market distorting solution, to a global problem.
The industry bodies added, “Fair and equitable MBMs are a viable policy option, to transition to the new fuels and technologies that will be necessary to phase-out GHG emissions in the sector. We’re joining with industry colleagues, to urge the UN and national governments, to prioritise discussion on MBMs, to make sure that shipping remains on course, to meet vital decarbonisation goals.”
Developing zero-carbon technologies and fuels
They concluded, “The decarbonisation of international shipping will depend on out-of-sector stakeholders developing market-available zero-carbon technologies and fuels, and the maritime sector will need the technologies to use these. The urgency of the challenge requires leadership and a properly coordinated approach, to catalyse and incentivise the transition to zero-emissions sector.”
