The maritime sector must reduce its carbon footprint. Approved IMO rules and proposed new regulations will make it harder for industry to achieve meaningful emissions reductions.

Strict global regulations are needed to reduce the carbon footprint of the shipping industry. As the Financial Times reported on May 3 (“Shipping heavyweight Japan files carbon tax proposal for industry”), IMO talks for the introduction of a global carbon tax for shipping are underway. These will continue at the IMO MEPC 78 meeting from 6-10 June. A carbon tax is certainly what global shipping needs. If structured carefully, a carbon tax can push industry to emit less by encouraging initiatives to improve efficiency and the implementation of zero-carbon technologies and fuels in shipping.

While much of the shipping industry strongly supports a global carbon tax for the industry, there are widespread concerns about the process and its likely outcome. The IMO’s new mandatory carbon intensity measurement for shipping, which will come into force in 2023, will put the IMO on a dangerous path. This new regulatory system is based on the Carbon Intensity Indicator (CII) measurements, which rely on a grossly imperfect measurement based on a vessel’s theoretical cargo take without taking into account the transport work performed. . These measures ignore operational and commercial efficiency and introduce the wrong incentives for the shipping industry, harming its ability to decarbonise.

Recent proposals on global carbon taxes – one tabled by China and supported by Brazil, Argentina, South Africa and the United Arab Emirates, and one of two proposals tabled by Japan – are particularly worrying. Both proposals want to levy a carbon tax on ships based on their CII scores. If the carbon tax proposals drafted by China and Japan are implemented, the regulations will further penalize ships and operations with the lowest emissions per ton of cargo carried – ultimately favoring empty ships. This approach, however well intentioned, is foolish. It’s as if the International Air Transport Association (IATA) were to introduce measures that reward airlines for flying half-empty jumbo jets. It is wasteful, it is wrong and it is misguided. The devil is in the details.

Operational and commercial efficiency is paramount to reducing emissions before zero-emission fuels and technology are widely available for all segments of shipping. Efficiency will also remain a critical factor in the future when the industry switches to zero-emission fuels, as these will be two to three times more expensive than fossil fuels. To put it bluntly, adopting a poorly developed regulatory framework that fails to take into account the importance of operational and business efficiency will hinder the industry’s transition to large-scale use of sustainable fuel solutions. zero emissions. That said, we call on the governments of the EU, UK and Norway to ensure that shipping industry regulations are both practical and sensible. As representatives of major maritime nations, these leaders have a great voice and a great responsibility. We must work to avoid senseless and unconstructive compromises within the otherwise consensus-driven IMO.

A KCC opinion piece from CEO Engebret Dahm

How can we create a more constructive regime? Rather than creating more perverse incentives for industry, the IMO should follow the EU’s lead. In 2023, the EU will include maritime transport in its emissions trading system (ETS), a tax based on the actual carbon emissions of the ships themselves. EU regulations provide an appropriate mechanism to reduce emissions. They also demonstrate that it is practically possible to have both a pure carbon tax and a cap and trade system like the EU’s ETS tied to actual ship emissions.

An approach like this would drive industry to collaborate, improving efficiency in every part of the marine supply chain. It would also drive investment in the zero-emission fuel solutions of tomorrow.

In a sector currently responsible for around three percent of global greenhouse gas emissions, carefully designed regulations and incentives are badly needed. Ill-conceived trade-offs blocking positive change in the shipping industry are not. If the IMO regulations are implemented as proposed by China and Japan, we risk ending up with yet another flawed and counterproductive IMO regulation.
Source: Klaveness Combo Carriers