By Dr J.Faber

In April 2018, IMO’s Marine Environment Protection Committee (MEPC) adopted the Initial IMO Strategy on Reduction of GHG Emissions from Ships (the Initial Strategy). The ultimate goal of this Strategy is to phase out greenhouse gas (GHG) emissions from international shipping as soon as possible in this century. It recognises that ‘global introduction of alternative fuels and/or energy sources’ will be required to reduce emissions to zero.

The Initial Strategy lists several intermediate goals, called “levels of ambition”. The first one is to let the emissions from international shipping peak as soon as possible; the second is to improve the carbon intensity of shipping by at least forty per cent in 2030, relative to 2008; the third is to reduce absolute emissions by at least fifty per cent in 2050, relative to 2008. The Initial Strategy lists a number of candidate short-, mid- and long-term measures, defined respectively as measures that will be adopted before 2023; between 2023 and 2030 and after 2030. The short-and mid-term measures will contribute to reaching the 2030 level of ambition and, therefore, predominantly focus on improving the energy-efficiency of ships, although they may also prepare for the long-term measures by encouraging the development of technologies that will be required to switch to alternative fuels and energy sources. The long-term measures will need to ensure alternative fuels are used by ships.

Operational Changes Needed

A study by CE Delft, UMAS and others for the European Commission (2019) concludes that the 2030 goals can only be met if the operations of ships change. In particular, speeds have to be reduced further. Other changes, such as better design efficiency and retrofitting energy-efficiency devices will help to meet the target, but will not be sufficient to achieve an improvement in carbon intensity of forty per cent or more.

Three proposals for short-term measures have been submitted to the next session of the MEPC that have the potential to result in operational changes, these are:

  • A proposal by Denmark, Germany and Spain for a “goal-based measure” in which ships would need to meet or exceed an operational efficiency standard. In practice, this would mean that ships would not be allowed to emit more than a certain amount of CO2 per tonne-mile. The exact amount would depend on the ship type (container ships would be allowed to emit more than bulk carriers, for example) and ship size (small ships would have higher maximum emissions than large ships).
  • A proposal by the Clean Shipping Coalition (CSC) and NGOs Seas At Risk and Transport & Environment to regulate operational speed. The CSC proposes that ships would be given a type- and size-specific maximum annual average speed. Because ships have to report their annual distance sailed and hours at sea to their flag state anyway, the annual average operational speed can easily be calculated.
  • A proposal by Japan to limit the shaft or engine power of ships. This measure would entail that the engine power would need to stay below a ship type- and size-specific maximum unless there is an emergency that requires using more power.

Depending on the stringency of the measure (for example what will be the maximum speed, which engine power the maximum), all three measures can ensure the 2030 level of ambition is met.

Getting Ships to Use Low-carbon Fuels

The long-term measures need to ensure that ships use increasing amounts of low- or zero-carbon fuels in order for the total emissions to be reduced to fifty per cent or less of 2008 emissions. Because the demand for transport is projected to increase, the carbon-intensity needs to improve by eighty per cent or more. The discussion on these measures has not really started yet, but it is clear that in order to transition to alternative fuels, these fuels and the technologies required to convert them into useful energy on board ships needs to exist. Since this is currently hardly the case, there is a need to develop technologies in the short term.

Assuming that the technologies for the use of low-carbon fuels will be available, the major barrier that the long-term measures need to overcome is how to ensure that the fuels are used, despite their presumably higher costs and their unfamiliarity to the maritime sectors. In principle, there are three conceivable policies:

  • increase the costs of fossil fuels;
  • decrease the costs of renewable fuels; and
  • mandate the use of renewable fuels.

An example of the first type of policy would be a fossil-carbon levy, that is, a tax on each tonne of fossil fuel used by ships. Model studies indicate that a carbon levy in the order of a few hundred to one thousand dollar per tonne of fuel would be required to ensure competitiveness of zero-carbon fuels.

The second type of policy would be a subsidy for renewable fuels. While such a measure may make sense in the initial phases of the innovation, for example for pilot projects and for the expansion of the bunkering infrastructure, it is not conceivable that renewable fuels would be subsidised to the level where they are cost-competitive with fossil fuels, because this would require high levels of taxation in other sectors in order to provide the funds for the subsidies.

An example of the third type of policy would be a fuel mandate, for instance mandating that an increasing share of the fuel used by ships emits very little or no carbon at all. Such a mandate could be introduced gradually, starting at the current level of the amount of carbon per unit of energy, and be reduced to zero. Because fuels are often either zero-carbon or completely made up of fossil carbon, it may be necessary to pool the obligation amongst several ships or to set up a new policy instrument that allows for pooling such obligations.

Towards Market-based Measures or Fuel Mandates

The Initial Strategy will require different short-, mid- and long term measures to reach its goals. The short- and mid-term measures are likely to be aimed at improving the energy-efficiency of shipping. These measures will result in operational changes and, in most cases, in reducing speed. At the same time, measures may be adopted that are aimed at developing technologies for the use of low- and zero-carbon fuels. From 2030 onwards, market-based measures or fuel mandates will be required to ensure that alternative fuels will replace fossil fuels.




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