The IMO’s Intersessional Working Group (IWG) on reducing greenhouse gas (GHG) emissions is due to start discussions ahead of December’s Extraordinary Session of the MEPC.
A more “constructive and professional atmosphere” is emerging as the IMO prepares to restart discussions over the Net Zero Framework (NZF) in September.
Liner shipping operator Hapag-Lloyd believes that the IWG should use this renewed collaborative period to “Bridge the remaining differences,” between member states and reach a workable compromise on emissions.
Em Fenton, senior director at environmental NGO Opportunity Green (OG), however, argues: “The compromise has been made, what we need now is political courage. So, the IMO Net Zero Framework is that compromise, it delivers justice and equity, it delivers a trajectory to a net zero shipping sector by 2050.”
Even so, two critical hurdles remain in place for an agreement to be achieved: how to deal with LNG within the framework and the creation, hosting, and dissemination of the net zero fund created by the carbon charges from the NZF.
But it remains unclear what a compromise would look like given an already challenging climate that requires those least able to be given the means to pay for protection from a crisis they did not cause.
Both issues, LNG emissions and the net zero fund, have been raised, vociferously, by Greek owners, most often by LNG carrier owners with the lead proponent being Dynacom founder and owner George Procopiou, although he is not the only one reciting these views.
He argues that LNG is the only ‘green’ fuel available and that placing exorbitant carbon charges on this fuel will serve to boost inflation and the IMO net zero fund but will do nothing to reduce emissions.
Procopiou told the audience at this year’s Posidonia, “The less fuel you burn, the less emissions you have,” after claiming that his newbuilds, currently on order, will be 35% more efficient the vessels they replace.
He believes that this view brings vessel owners and “fanatical environmentalists” into alignment for the first time.
Environmentalists, however, believe that burning potent fossil fuels, such as LNG, as a method for reducing GHG emissions is tantamount to dousing a fire with petrol, in the hope that it will not spread.
In a recent report OG outlined the four major proposals that have been put forward as solutions to the current impasse over the NZF.
In OG’s assessment of Australian, Tuvaluan, Brazilian and Liberian proposals, Liberia’s suggestion that any GHG fuel intensity (GFI) mitigation should be tied to “affordability and availability” of fuels is considered the least viable.
OG noted that basing emissions reductions on affordability and availability of fuels: “Would delay regulatory tightening,” and “Encourage the continued reliance on fossil fuels.”
Rather than diminishing the use of fossil fuels OG claims Liberia’s proposals would see the increased use of LNG and biofuels that are unable to deliver the emissions reductions needed to “Achieve the IMO’s 2023 GHG Strategy targets or put international shipping on a pathway consistent with the Paris Agreement.”
Liberia would cancel the proposal to develop a net zero fund, as under their concept such a requirement would be unnecessary.
Or as Procopiou somewhat sarcastically put it: “We have this very adventurous new IMO secretary general, Arsenio Dominguez, he wants to become the biggest banker in the world.”
There is no mention from Liberia or Procopiou of a just and equitable transition to net zero fuels, nor is there any mention of meeting the Paris goals and mitigating the effects of climate change.
Conversely, a Hapag-Lloyd spokesperson told Seatrade Maritime News: “The transition needs to take place on a global level playing field. International shipping is a global industry, and a fragmented regulatory landscape would add complexity and uncertainty and could make the transition more costly.”
According to Hapag-Lloyd long-term regulatory certainty is “one of the most critical issues,” for the carrier.
He added: “Investments in vessels, fuels and infrastructure are made many years in advance, so companies need a clear and predictable framework to make the right investment decisions.”
According to the OG assessments of the NZF proposals Australia makes very little change to the 2023 position agreed by the IMO, while Brazil looks soften the early part of the transition, ramping up fuel intensity requirements at a later stage.
Only Tuvalu’s proposal would increase the carbon penalties to 100% of emissions from 2029.
Tuvalu would: “inserts the impact of the original proposal made by Tuvalu and other Pacific islands to impose a levy on all GHG emissions from international shipping into the architecture of the NZF by increasing the threshold for direct compliance to 100% [from 2029],” said OG.
It may seem that the two sides remain poles apart, but Ioanna Procopiou, MD at Prominence Maritime offers some hope that the two extremes can converge into a workable deal, at least on fuels.
According to Ioanna Procopiou production of global green electricity would need to more than double, to 136% of current production, for net zero fuels like methanol and liquified hydrogen to power the shipping industry.
“The greenest fuel is the fuel you don’t burn,” she added.
