Seatrade-Maritime: Shipping’s net zero ambitions at a crossroads

Published by Seatrade-Maritime

As the IMO Intersessional Working Group on greenhouse gas (ISWG-GHG) emissions gets under way it cannot have escaped the delegates’ that the climate crisis is in full swing and action must be taken.

Catastrophic climate events across Europe this summer and most recently the collapse of a glacier in the Himalayas are said to be the types of events that scientists feared, with a study by the International Centre for Integrated Mountain Development, released in March, showing that ice loss rates in the Hindu Kush have doubled since 2000.

With El Niño expected to be at its most severe in the coming months, Rhine water levels at there lowest and typhoons raging across Asia disrupting shipping severely in some regions, there is clearly a need to find a solution.

Last year’s aborted attempt to confirm the NZF at October’s Extraordinary Session of the MEPC was derailed by the US and others using threats to prevent nations for voting for the NZF, with the vote eventually delayed until November this year, allowing for further discussions to take place.

Simon Bergulf VP of environment and climate at the World Shipping Council (WSC) believes that there could be room for a solution after hearing Federal Maritime Commission (FMC) chair Laura DiBella’s statement on 20 August.

“In my view, efforts toward emissions reductions must be linked explicitly to demonstrated viability and realistic availability of alternative fuels, not a pre-determined, rigid implementation date or limited fuel options,” said DiBella.

According to the FMC chair alternative fuels must, “Satisfy clear, transparent and agreed-upon measures of affordability, global availability, and scalability in order to meet the needs of the shipping industry and prevent additional costs to the public.”

As such she believes that both LNG and bio-LNG could realistically supply over 60% of global maritime fuel by 2050”.

To an outsider this would seem to be shipping’s ‘drink bleach to cure covid’ moment, advocating the use of a more potent GHG to solve a crisis that is caused by such emissions.

Even so Bergulf argues that the US has softened its approach and shown “a willingness to engage”.

“They have some red lines, but I would say it’s much more constructive to come and say, here are the red lines that we have, we need to make this work,” Bergulf told Seatrade Maritime News.

As the US is set to become the global leader in bio-LNG, DiBella has demanded American produced bio-LNG “Must be recognized as a qualifying fuel”.

Others believe that the NZF should be implemented as approved at the April 2025 MEPC83 and should not look to dilute the regulation.

Sapphire Ross, policy officer at NGO Opportunity Green, said: “Shipping cannot claim to be on a credible net-zero pathway while continuing to rely on solutions that don’t meaningfully cut emissions.”

That is view that Bergulf and the WSC agree with, though it appears to contradict its view on the US position.

“We need something that’s actually sending a very strong signal to the production and fuel offtake agreements, and that signal needs to be aligned with the 2023 strategy,” said Bergulf.

WSC, while trying to remain fuel agnostic are walking a slender tightrope, with Bergulf adding: “That doesn’t mean that the proposal from Liberia and Panama can’t be used it just means it needs some elements from other proposals thrown in.”

Proposals for the NZF modification, as led by Liberia would exclude alternative fuels that cost more than 15% above standard fuel oil. Effectively, GHG targets would change based on whether clean fuels are available and affordable.

Moreover, the Liberian proposals would cut the net zero fund, a move that the US was also aligned with, describing the carbon charges as, “An unnecessary charge on American shippers and vessels operating in international waters, warning that billions of dollars in annual compliance costs would ultimately be passed on to US consumers.”

Liberia’s proposals for the resetting of the NZF, as supported by the US, effectively put commerce and profit ahead of the climate crisis. Scientists are already concerned that the Paris Goals are unachievable, and the consequences of a heating planet are already being felt.

Nevertheless, Bergulf points to the Brazilian proposals which suggest a compromise where carriers accrue credits for low carbon fuels across a fleet, reducing the payments made to the Net Zero Fund.

Ross, however, argues regulations must ensure that money reaches small island states and the least developed countries who, she said: “Did the least to cause this crisis but face its greatest impacts.”

According to Opportunity Green the decisions made this week “will have consequences far beyond shipping.”

Meanwhile Dr. Dola Oluteye, senior fellow at the University College London Energy Institute and founder of the Professional African Technical Network Advisory (PATNA), said the growing African support for the NZF is no surprise given that it would offer a “predictable stream of revenue”.

“African countries are coming to the IMO this September with concrete proposals on how this future fund should operate, demonstrating their will to get the agreement adopted this year.”

With the expectation that any vote at the Extraordinary Session of the MEPC at the end of November would be close, 55-51 in favour of the NZF, pro-NZF campaigners believe that a failure to adopt the proposals could set the industry back years.

Ports and vessel operators point to heavy investments already made to drive the industry towards its target of being climate neutral by around 2050.

“Laying the regulatory foundation now is critical to ensuring that these investments take shipping into the right direction,” concluded Höegh Autoliners’ CEO Andreas Enger.