The shipping industry may look beyond the International Maritime Organization in 2022 for guidance in combatting climate change, amid mounting pressure to increase the pace of its current efforts.
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RegistroThis comes after the IMO failed to upgrade its climate targets at its Marine Environmental Protection Committee (MEPC 77) Nov. 22-26, as delegations from a number of countries decided not to double the existing IMO target of a 50% reduction in greenhouse gas emissions from the global fleet by 2050, compared with 2008 levels. This dashed the hopes of a number of industry observers.
The lack of progress met rebuke from different quarters.
"I think businesses are more responsible than that. [There are lots] of private businesses which may be less influenced by public opinion," Hugo De Stoop, CEO of Euronav, one of the world's largest tanker firms, told S&P Global Platts after MEPC 77.
"After all, these guys have kids," he added.
The shipping industry is getting ready to decarbonize, but more support is needed in terms of emissions reduction targets and policy measures from the IMO, analysts at S&P Global Platts Analytics said.
Under the current set of IMO targets, around 60% of bunker demand will need to come from sustainable energy by 2050, Platts Analytics said.
More regionalized legislation than the global approach of the IMO may prove significant in terms of decarbonizing shipping, said Emily Stausboll, a market analyst at ocean and air freight data firm Xeneta.
One example is steps undertaken by the European Union; the bloc has proposed including shipping in its Emissions Trading Scheme. Another is the Clydebank Declaration, which over 20 countries signed during COP26, in which the signatories committed to developing at least six green shipping corridors between two or more ports by 2025 and by "many more" by 2030.
"There will likely be a couple of different solutions, but given the pace at the IMO, other players are moving forward more quickly, such as the EU as well as companies involved in shipping who are facing pressures from their customers and shareholders," Stausboll said.
Decarbonizing is top of the agenda in every boardroom across the shipping industry, a spokesperson for the International Chamber of Shipping said following MEPC 77.
The ICS spokesperson added the group still expects more of the IMO and governments. The group will continue to work with governments and the IMO to agree to the suite of measures which the industry has proposed, including a $5 billion R&D fund as an immediate step to be followed by a levy-based carbon price for shipping, the spokesperson said.
Neither of these proposals were adopted at MEPC 77.
"Industry is calling on governments to act decisively at the next MEPC in June 2022," the ICS spokesperson said.
IMO targets
The IMO's initial greenhouse gas strategy, which was mandated in 2018 and which specified the 50% cut in GHG by 2050, is due to be revised in 2023.
The IMO has said it is on track to deliver revisions under that timescale, which implies action in 2022.
"All proposals for ambitions and goals will be part of the revision of the IMO GHG strategy. This is to take place during 2022 with adoption in spring 2023," and IMO spokesperson said after MEPC 77.
In any case, some shipping companies are setting their own goals. For example, container giant A. P. Moller-Maersk is targeting net-zero by 2050.
The Council of Members of the International Association of Independent Tanker Owners (INTERTANKO) said Nov. 25 that international shipping should strive to achieve net-zero CO2 emissions by 2050.
Euronav's De Stoop said in a LinkedIn post Nov. 29 his company agreed with the ICS and that MEPC 77 was a missed opportunity, without providing further details.
On the financial side of the sector, the Poseidon Principles expects to amend its ambition to zero by 2050 early next year, following the UN Climate Change conference in Glasgow and MEPC 77, Michael Parker, chairman for global shipping logistics and offshore at Citibank and chair of the Poseidon Principles Association steering committee, said during the Ship Zero conference in Glasgow.
Currently, 28 financial institutions are signatories to the Poseidon Principles, representing a bank loan portfolio to global shipping of approximately $185 billion, nearly 50% of the global ship finance portfolio. More banks are expected to join in the near future, according to the organization's website.
The Poseidon Principles launched an additional arm for marine insurers on Dec. 15, which envisages two trajectories against which signatories can benchmark themselves and which provides a blueprint for industry players to go beyond existing IMO climate targets. One trajectory is of a 50% reduction in GHG emissions by 2050 from 2008 levels, in line with existing IMO targets, and the other is of a 100% reduction in GHG emissions over the same timeframe.