November 16, 2021
The COP26 has solidified the importance of reaching net zero emissions by 2050 to stay in line with the Paris Climate Agreement Goals. The shipping industry and specifically the IMO’s target of cutting GHG emissions by 50% by 2050 is seen as out of touch amongst the industry, which has come to terms with the need to fully decarbonise the sector by 2050. We take a look at the outcomes of COP26.
In this article we list some of the declarations and pledges from the COP26 that will impact the shipping industry. We have also looked at other initiatives inspired by the COP-spotlight on shipping and how they urge for collaboration to reach net zero by 2050.
Signatories of the Clydebank Declaration for Green Shipping Corridors have pledged to establish at least six green shipping corridors by 2025 and support the creation of more zero emissions maritime routes by 2030.
The purpose of the initiative is to create the infrastructure required to enable ships to transition to carbon-free fuels. One of the biggest concerns raised in the industry is the lack of adequate and readily available green infrastructure capable of supporting carbon free alternative fuels and vessels. Therefore, ship owners are reluctant to make investments in carbon free-ships and fuels that they currently cannot use long –term. This declaration aims to encourage the industry to invest in green shipping and commits to ensuring that the necessary infrastructure will be available for large-scale use.
This can be achieved by the creation of partnerships between ports, operators and other parties along the value chain to help in the decarbonisation of routes both domestically and internationally. Partnerships will focus on the development of green infrastructure and regulatory frameworks that promote shipping decarbonisation and the collaboration and partnerships between different stakeholders in the shipping ecosystem.
Twenty-two countries have signed the Declaration including the United States, United Kingdom, Australia, Japan, France, Germany, and Norway.
The Declaration on Zero Emission Shipping by 2050 calls on the International Maritime Organisation to align its targets with full decarbonisation by 2050, regulate greenhouse gas emissions and ensure the regulatory framework facilitates decarbonisation initiatives in the industry. The declaration also emphasizes the importance of international collaboration amongst all members of the value chain in shipping, both on a governmental and private level, to develop new green technologies, get zero carbon ships in the water by 2030 and establish zero emission routes.
Fourteen countries have signed the Declaration including the United States, Denmark, United Kingdom, Norway, Germany and France.
The Climate Vulnerable Forum has called upon the International Maritime Organisation to establish a mandatory GHG emissions levy on international shipping to facilitate the industry’s pathway towards net zero by 2050. The urgency of using the funds to assist developing countries with decarbonisation was also emphasized, especially in relation to getting equal access to new green technologies.
Fifty-five nations have signed the declaration and express support for a GHG levy to be globally introduced.
The International Chamber of Shipping (ICS) introduced a proposal for an international research fund aiming to raise funds for research and development of new green technologies. According to the International Energy Agency on private sector R&D in the maritime sector, R&D spending has fallen from 2.7 billion USD in 2017 to 1.6 million USD in 2019. Investment in green technologies is key to reaching net zero emissions by 2050 and it is essential in building up security amongst industry players investing in future decarbonisation projects. The proposal promotes a 5-billion-dollar fund, which would be managed by the International Maritime Organisation and financed by shipowners via a compulsory R&D contribution of 2 dollars per tonne of fuel consumed.
The ICS is urging the IMO to approve the fund in the 77th MEPC Meeting later this month and further pushes for it to be in place by 2023.
The International Chamber of Shipping has put forward a proposal for the introduction of a global carbon levy. The levy applies to ships over 5000GT trading globally and will act as a mandatory contribution by the shipowner for every tonne of CO2 emitted. The proceeds will go to an IMO climate fund and will be used to invest in new green technologies. The main goal of the levy is to reduce the price gap between zero-carbon fuels and conventional fuels and encourage shipowners to switch to zero-carbon fuels. Guy Platten, ICS Secretary General, argues that “A levy-based system can give the industry price certainty, and more stability for making investment decisions in zero –carbon ships and developing emissions saving technology.” The IMO will be discussing several proposals on market-based measures during the upcoming MEPC meeting and must act quickly to enforce global regulations to achieve decarbonisation by 2050.
The United States and the European Union launched the Global Methane Pledge at COP26 calling on nations to reduce global methane emissions by at least 30% from 2020 levels by 2030, which could eliminate over 0.2˚C warming by 2050. On a national level, the participants commit to using the highest IPCC good practice inventory methodologies, improve the national greenhouse gas inventory reporting under UNFCCC and Paris Climate Agreement as well as enable more transparency in key industries. On an international level, global action by private institutions to enhance technical and policy action will be crucial to reducing methane emissions. Over 100 countries have joined the pledge and supporters include the European Bank, the International Energy Agency, and the IKEA Foundation.
On this note, a double-sided debate on the use of LNG took place in the COP26 with supporters of the fuel arguing in favour of its use as a transitional fuel while opponents argue it is not a long-term solution and further investment should be halted. More notably, the World Bank published a report recommending that new public policies avoid investments the use of LNG in the maritime industry. Considering that LNG emits methane and taking into account the Global Methane Pledge and the CVF Appeal for a global GHG levy, it is interesting to see whether the IMO will consider a GHG levy targeting LNG methane emissions.
GFANZ is a global coalition of financial institutions working towards accelerating the decarbonisation of the global economy. Created and headed by Mark Carney with Michael R. Bloomberg joining as Co-Chair, the coalition urges global financial institutions to change their business practices and develop plans for a decarbonised, sustainable future. Investments in green technology and climate initiatives should be prioritised and supported. The transition to a green economy requires annual clean energy investment to triple by 2030 to around 4 trillion dollars. The shipping industry requires a tremendous amount of financial support to develop the technologies necessary to transition to a carbon free fleet and fuels. The finance sector’s contribution is crucial in the transition to a green economy and in reaching net zero emissions by 2050.
A lot has happened during the COP26 and there is no doubt that the spotlight was on the shipping industry. It is worth acknowledging that the COP inspired several initiatives both in the run up to the conference and as a result of conversations during it, which further highlight the commitment to decarbonisation by 2050.
Read more about the COP26 inspired initiatives and what they mean to the shipping industry in the article COP26: Wind blows steadily for shipping net zero by 2050.
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