Let's keep decarbonisation global

LAST week's Future of Shipping: Decarbonisation webinar jointly organised by the International Maritime Organization (IMO) and Singapore took place as the threat of unilateral action undermining IMO loomed large.

Singapore's Minister for Transport, Ong Ye Kung, said: "While the world deals with the Covid-19 crisis, it must keep up with the fight against climate change. No one can do this alone. It is a global ambition, to be accomplished by the international maritime community. But we all have capabilities, expertise and resources to contribute to this endeavour. Singapore will do our part, and we look forward to the maritime community coming together, under the leadership of the IMO, to redouble our efforts and build a better, greener world."

That emphasis on working through the IMO is important. One of the main themes of the webinar was the importance of collaboration and coordination among all stakeholders across the energy and maritime transport value chains, to achieve IMO's ambition of reducing total annual greenhouse gas (GHG) emissions by at least 50 per cent by 2050 compared to 2008.

IMO secretary-general Kitack Lim called for more action to speed up research on zero-carbon marine fuels, saying: "To achieve this, IMO is stepping up its efforts to act as a global forum and promoter in research and development (R&D) in zero-carbon marine fuels, bringing together interested stakeholders from public and private sectors, and also private and development banks and other potential donors around the world."

That can be seen as nod towards the industry-supported proposal for a levy of US$2 per tonne to support R&D. Even without that extra funding, a lot of R&D is underway.

At the webinar, IMO and Singapore introduced NextGEN - a concept for a collaborative global ecosystem of maritime decarbonisation initiatives. It is intended to facilitate information sharing on decarbonisation initiatives across stakeholders such as IMO member states, industry, and academia, identify opportunities and gaps for decarbonisation in the global shipping ecosystem, and create important networks and platforms for collaboration.

Predictable and equal

However, the big political decisions to be taken are related to how to incentivise moving towards decarbonisation and whether to do that under the IMO umbrella or on a regional basis. In IMO-speak, potential financial impositions on shipping are called market-based measures (MBM).

The webinar had a facility for putting questions to the panel of speakers in a final question-and-answer (Q&A) session. I jumped in quickly with: "How unhelpful is the recent European Union (EU) Parliament's decision to push for the EU's emissions trade scheme to to be applied to shipping? Does it undermine IMO?"

As it happened, one of the panellists - Andreas Sohmen-Pao, chairman of BW Group and co-chair of Singapore's International Advisory Panel on Maritime Decarbonisation (IAP) - had addressed this issue early on but linked it to MBM and to the R&D levy.

He said any MBM must be predictable and equal to all in its application. Shipowners need to know how much they would have to pay. It was also important that all shipowners were affected equally.

He also pointed out that the EU emissions trading system (ETS) prices fluctuated wildly, so it did not meet the predictability test. A straight levy on bunker sales met both tests, he argued.

When it came to answering my question in the Q&A , he was very polite about the EU. He said it was good that the EU kept up the pressure on the shipping to act on GHG emissions.

However, he also referred to his earlier comments and said the emissions trade scheme (ETS) proposal was "fundamentally flawed".

Nevertheless, the EU is now intent on imposing an ETS on shipping, with all of its controlling elements - the member states, the Commission and the Parliament - all committed to the idea. However, there have been noises emerging in the past week that, initially at least, the ETS will only be applied to domestic shipping.

Meanwhile, the pressure is on to move towards IMO-developed MBM, possibly building on the basis of the US$2 per tonne R&D levy. It might still be possible to have a global arrangement for MBM. Let us hope so, for regional schemes would be messy and disruptive.