• The shipping sector’s first binding emissions targets are laudable, but not enough to drive needed investments.
• Uncertainties remain, as future revisions may be needed to ensure the zero-emission goals are met.
• National governments need to step up to bridge the cost difference between fossil and e-fuels, support the development of required infrastructure and fuel production, and ensure that more is done to promote the transition in the Global South.

The International Maritime Organisation agreed to the sector’s first binding targets to reduce greenhouse gas emissions from ships. The shipping sector is now the first industry with internationally mandated targets to reduce emissions. This outcome is the result of constructive discussions among IMO member states since the adoption of the IMO’s 2023 greenhouse gas (GHG) strategy. Given ongoing geopolitical tensions and trade disruptions, this binding agreement represents an example of multilateralism still at work.

“While the targets are a step forward, they will need to be improved if they are to drive the rapid fuel shift that will enable the maritime sector to reach net zero by 2050. While we applaud the progress made, meeting the targets will require immediate and decisive investments in green fuel technology and infrastructure. The IMO will have opportunities to make these regulations more impactful over time, and national and regional policies also need to prioritise scalable e-fuels and the infrastructure needed for long-term decarbonisation,”

SAYS JESSE FAHNESTOCK, DIRECTOR OF DECARBONISATION AT THE GLOBAL MARITIME FORUM.

Member states agreed to a package of technical and economic elements, including a Global Fuel Standard that sets GHG intensity reduction targets for each year through 2035 and agreed on the penalties for failing to meet the targets. The measures also put in place a credit trading scheme through which vessels with lower emissions can generate credits to sell to owners of higher-polluting vessels. Revenues generated by the penalties will be used to fund a reward mechanism for zero- and near-zero emission fuels and can potentially support a just and equitable transition. This includes areas such as availability, uptake, and transfer of zero-emission fuels and technologies, seafarer training, capacity building, and addressing disproportionate negative impacts on developing states.

However, the agreed measures may not be strong enough on their own to deliver on the IMO’s strategy. The GHG intensity targets create uncertainty as to whether the strategy’s emissions reduction checkpoints for 2030 and 2040 will be met. As currently designed, measures are unlikely to be sufficient to incentivise the rapid development of e-fuels such as e-ammonia or e-methanol, which will be needed in the long run due to their scalability and emission reduction potential. A failure to begin investing in these fuels now would put the target of at least 5% zero- and near-zero emission fuel use by 2030 and the industry’s entire 2050 net-zero goal at risk.

A lot of work remains to be done. There will be opportunities to strengthen the GHG intensity targets and penalties via future reviews. In addition, crucial details about the implementation of the measures will need to be developed between now and their entry into force in 2028. These include guidelines on the revenue disbursement and life cycle emission factors of fuels that will affect which fuels and vessels can receive financial support, and which fuels are capable of meeting the targets in the short run.

As the measures in their current form are unlikely to deliver an early transition to e-fuels, active support from national and regional policies is also needed. To this end, the Global Maritime Forum calls on national governments, regional institutions, and collaborative industry initiatives to re-double their focus on zero-emission shipping, for example by finding ways to bridge the cost difference between fossil and e-fuels, supporting the development of required infrastructure and fuel production, and ensuring that more is done to promote the transition in the Global South. As the industry evaluates its investments in this transition, long-term strategies are key to avoid further locking into short-term solutions.

Source:IMO