Do we really need a decarbonisation R&D bunker levy?

FOR some time now, several maritime organisations have been promoting the idea of a levy on bunker purchases that would be used to pay for research and development leading to the decarbonisation of the shipping sector.

In late November last year, a proposal to take this project forward was considered by the International Maritime Organization (IMO). The United Nation agency's Marine Environment Protection Committee at its 77th meeting (MEPC 77) put off a decision and sent it to a working group for further consideration.

A final decision on whether to approve the establishment of the International Maritime Research and Development Fund (IMRF) is expected to be taken by MEPC 78 in June this year, following further consideration of the proposal by an IMO working group meeting in May.

International Chamber of Shipping (ICS) secretary-general Guy Platten said immediately after MEPC 77: "We are disappointed that the words and commitments made by governments at COP26 have not yet been translated into action. This week's meetings have missed the opportunity to take forward a range of GHG (greenhouse gas) reduction measures which would accelerate the development of zero emissions ships that are urgently needed at scale to decarbonise our sector. It's almost as if COP26 never happened."

Since then, the shipping organisations, notably including the liner industry body the World Shipping Council (WSC), have continued to work hard on getting their ideas accepted.

In a joint submission to the IMO MEPC 78, the sponsors have put forward a modified proposal for an International Maritime Research and Development Board (IMRB) and International Maritime Research and IMRF "to ensure the equitable use of funds, as well as fair and equal access to patents and technologies globally".

The original submission to IMO had the support of major shipping nations including Singapore, Denmark, Greece and Japan. The current proposal has the support of 30 IMO member states. Co-sponsors of the latest proposal include Liberia, Nigeria and Palau.

It is now proposed that US$50 million annually be devoted to supporting related technical assistance efforts in small island developing states and least developed countries. The governance structure of the IMRB's board of directors would be expanded to include 10 IMO-member state government representatives with "balanced representation geographically".

The updated proposals include criteria to encourage collaboration in projects between developed and developing country institutions, and modifications to the intellectual property text to "better address concerns raised about sharing of R&D work and related intellectual property rights".

WSC president and chief executive officer John Butler commented: "Accelerating R&D investments into zero carbon technologies is the first pathway the member nations of the IMO should adopt in order to enable progress across other regulatory areas such as market-based measures."

He continued: "The transition to zero carbon shipping presents a unique opportunity for nations with abundant resources for green energy such as sun, wind and waves to develop as suppliers of alternative maritime fuels. The IMRB/IMRF is ready to implement, and the amendments now proposed further ensure its ability to provide equitable access to both funding and outputs."

Just pick a date

ICS deputy secretary-general Simon Bennett commented: "Developing countries are experiencing the worst of the climate crisis. Industry wishes to earmark some US$50 million per year to support GHG reduction projects in developing and climate vulnerable countries, including small island developing states. This would be a significant investment and a major boost to the IMO's existing programmes to ensure that the global net-zero transition is fair and equitable."

ICS, WSC and the other shipping organisations want the governments who have sought to delay the immediate approval of the IMRF to reconsider their position.

Bennett continued: "We are concerned that the European Commission may wish to delay the IMRF by combining it with separate discussions about carbon pricing. Although we also want an IMO market-based measure as soon as possible, this will likely take several more years to negotiate. Meanwhile, the need to drastically accelerate R&D is becoming ever more urgent if a net-zero target by 2050 is to be plausible."

Bennett concluded: "The IMRF is the only proposal ready to go to accelerate decarbonisation across the sector. Opposition to its adoption will not only frustrate the rapid acceleration of R&D that is needed to support shipping's net-zero target for 2050, but also prevent a fair and equitable transition."

The latest proposal from the shipping industry does represent a significant shift. The main focus is still on promoting technology, but now with an emphasis on meeting the concerns of island and least developed countries.

So is the IMRF needed? There are 2 ways of looking this. As argued before by this column, the case that there is not sufficient research and development in technology needed for decarbonisation is now very weak.

There are a large number of R&D projects underway and many shipping companies are well advanced in moving towards zero carbon. Liner giant AP Moller-Maersk has committed to achieving zero carbon by 2030, primarily using methanol as fuel. Other new technologies and carbon offsetting are coming into use at a rapid pace.

However, politically, adopting the IMRF would be a strong signal that IMO is committed to decarbonisation. Given that technologies aimed at providing alternative fuels are already well advanced, it may be better to concentrate much more on supporting GHG reduction projects in developing and climate-vulnerable countries.

It is important to recognise that IMO, with the IMRF proposal and possibly eventually, market-based measures, is being urged to approach decarbonisation in a very different way to how it has operated in the past.

We need to recognise that what IMO does best is developing regulations. That is the way it has addressed every major challenge it has faced so far.

Shipping has been told it must achieve certain things by particular dates. That has worked with everything from reducing sulphur in fuel though maritime security, and safety issues to implementing water ballast management. It is difficult to understand why decarbonisation cannot be tackled in the same way.

Why not just pick a date for net zero and let the industry get on with it. Oh, and 2050 is far too late.