International shipowners need to significantly reduce their carbon-dioxide emissions by 2030 and will come under pressure to achieve carbon neutrality by 2050. Given that the industry currently depends almost entirely on fossil fuels for ship propulsion — and that every zero- or near-zero-carbon alternative faces serious headwinds — it won’t be an easy or low-cost transition. One pathway would be expanding the use of LNG as a bunker fuel in the near term and then shifting to alternatives like bio-LNG and synthetic LNG as they become more commercially available and economic. Another would be to use “green” or “blue” hydrogen, ammonia, or methanol. But there are challenges to each, not the least of which are the small volumes of non-traditional fuels being produced — and their high cost — and the need for new infrastructure both to produce and distribute them, as we discuss in today’s RBN blog.
This is the second blog in our series on efforts to reduce emissions of carbon dioxide (CO2) and other greenhouse gases in the shipping industry, which accounts for about 3% of global GHGs. In Part 1, we looked at the push by leading international shipping associations and many large shipowners to have the International Maritime Organization (IMO) ratchet up the industry’s decarbonization goals. In effect, shipowners — themselves under pressure from their large, ESG-minded customers, shareholders, and lenders — are telling the IMO that its goals of reducing global shipping’s carbon intensity (CI) by 40% from its 2008 level by 2030 and total GHG emissions by 50% by 2050 are far too timid. They want the IMO to set a more aggressive CI-reduction target for 2030 as well as a goal of eliminating or fully offsetting GHG emissions by mid-century.
Further, a long list of international shipping associations — including the International Chamber of Shipping, Intercargo, and the World Shipping Council — has been pressing for the creation of a $5 billion research-and-development fund to accelerate the advancement and introduction of zero-emission technologies and fuels for maritime transport. If approved, the IMO-administered fund would be financed by a proposed $2-per-metric-ton ($2/MT) levy on all marine-fuel sales. There also have been a number of proposals — by countries, shipping organizations, and individual companies — to implement a levy on shipping companies for each metric ton of CO2 equivalent (CO2e) their fleets emit.
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