The International Chamber of Shipping (ICS) said its board unanimously supported the proposal which would see shipowners contribute cash into an IMO fund for each tonne of CO2 emitted by vessels. The fund would be used to reward early adopters of alternative fuels and support the development of green technologies.
The latest proposal follows IMO’s rejection of a proposed $5bn R&D fund put forward in 2021. That fund would have been supported by a $2 per tonne levy on bunker fuel.
Simon Bennett, Deputy Secretary General of ICS said: “The Fund and Reward mechanism put forward by ICS is intended to be as simple as possible for IMO to establish. With political will, it can be readily adopted via the existing IMO MARPOL Convention by 2024, so that our commitment to net zero by 2050 can remain plausible given the enormous challenge of transitioning the entire global industry to new fuels and technologies in less than 30 years.”
ICS said its submission details the collection method for the flat rate levy on ships. The carrot and stick approach would see green fuels supported both by the levy on CO2 emissions and by rewarding the prevention of CO2 emissions through the use of alternative fuels. Both would have the effect of narrowing the price gap between traditional and lower-emission fuels.
“In addition to funding the rewards programme for the uptake of low and zero-carbon fuels the contributions by shipping companies will generate billions of dollars annually to support the production of alternative marine fuels in developing countries. The fund will also be available to de-risk the rollout of the new bunkering infrastructure that will be required on an accelerated timescale,” ICS said in a press release.
ICS said the submission includes details on the greenhouse gas emissions measures the fund will prioritise for development, and the technical details needed to flesh out the core of the levy mechanism including the reward rate for use of green fuels.
Whether the use of various alternatives fuels will be eligible for reward from the IMO fund will be dictated by the outcome of IMO’s carbon lifecycle assessment of marine fuels.
The association has also left the levels of contribution to the fund up to the discretion of governments at IMO, but proposed initial total funds of around $10bn per year, equivalent to around $50 per tonne of fuel oil used.
Funding at such a level could fund a rewards programme through to 2030 and “provide tens of billion dollars to support maritime GHG reduction projects in developing countries,” said ICS.
“Our immediate goal is to ensure that some kind of levy-based global economic measure will be prioritised for rapid finalisation by the IMO Marine Environment Protection Committee at its next meeting in July. This critical meeting of governments is also expected to adopt a formal net zero target for shipping which will only be truly credible if a measure such as that proposed by the industry is taken forward immediately,” said Bennett.
Guy Platten, Secretary General of the International Chamber of Shipping added: “I am pleased that the principle of a global contribution paid by shipowners into a fund is increasingly being recognised as the fairest and most effective method to create the funds and incentives required to catalyse the decarbonisation of our industry.”
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