IMO agreement on cutting CO2 emissions

The IMO is the first UN agency to agree on concrete climate measures for a global sector. The agreement in principle was adopted by a majority of the 175 IMO member states, but was also widely criticised.

The agreement in principle, adopted by a majority of the 175 IMO member states in the UN organisation’s environment committee, contains two measures. Besides bare bones pricing of greenhouse gases, the agreement also introduces carbon credits, which shipowners can trade among themselves and resource across their fleets.

The approved text sets progressively stricter requirements for ships’ fuel intensity, starting in 2028 with an initial baseline target of 4% and a higher ‘direct compliance’ target of 17%.
These would increase year on year to a ‘baseline’ target of 30% and a direct compliance target of 43% in 2035.

Ships that do not meet it would have to pay for their emissions based on a tiered system. The price for emissions above the minimum ‘baseline target’, known as ‘tier 2’, would be set at $380 per tonne of CO2 equivalent, with the option to save or pool compliance surpluses.
This price would be $100 per tonne for ships in the so-called ‘Tier 1’, meaning they meet the baseline target but their emissions are above the direct compliance target.

The proposal also provides for the creation of an IMO Net-Zero Fund to redistribute revenue from the pricing mechanism. Those funds will in turn be used to reward the use of zero or net-zero (ZNZ) fuels.

Heated debates

The decision follows discussions and heated debates in which IMO member states were embroiled from 7-11 April. The main topic of the discussions was the proposed carbon tax. Some countries, such as the United Arab Emirates and the United States, strongly opposed it, while small Pacific island states were right huge supporters. The United States did not even attend this week’s talks, but sent a letter objecting the measure and threatening to retaliate against any fines.

Criticism from T&E

Transport & Environment (T&E), an independent European environmental NGO focusing on sustainable transport policy, has also been quite critical of the agreement, but for very different reasons. T&E is seen as one of the main watchdogs for transport emissions in Europe and often opposes traditional maritime lobbies.

Although the agreement introduces emission reduction targets and penalties, T&E argues that these measures fall far short. For instance, almost 90% of excess emissions will be exempted from carbon penalties, greatly limiting the impact of the system. T&E estimates that the framework could generate around $10 billion a year in revenue up to 2035, but warns that the actual impact will depend heavily on the future creation and operation of an IMO Net-Zero Fund, which may be delayed.

Biofuel

T&E also warns that weak sustainability criteria could lead to an increase in the use of low-cost, high-risk biofuels such as palm and soybean oil. They say this could lead to a spike in emissions – potentially 270 million tonnes of carbon dioxide equivalent extra by 2030 – if precautions are not taken. They argue that without long-term policy certainty and stronger environmental protection, the IMO framework risks undermining its own decarbonisation goals.

Strong dissenting voice

In addition to T&E, Seas At Risk also raised concerns. The proposed levy, which is expected to raise about $10 billion a year, is not enough, the NGO said.
‘This week’s outcome ignores even the IMO baseline, throwing the 2030 low-carbon goal into the water, with potentially disastrous long-term consequences for people and the planet.  The EU may have drifted into the corner of low ambition, but it has produced bold voices: the emergence of a strong, united voice from countries in Africa, the Caribbean and the Pacific shows that the global south will not wait for the north to put its house in order,’ said Anaïs Rios, policy director of Seas At Risk.

Delaine McCullough, president of the Clean Shipping Coalition, joined the chorus of critics: ‘This week, IMO member states missed a golden opportunity for the global shipping industry to show the world how they can turn the tide on catastrophic global warming by putting their own goals – eliminating the sector’s greenhouse gas emissions without leaving countries behind – out of reach.’

Sources: IMO, Safety4Sea, Bunkerspot, CSC, MCST, Seas at Risk and Schuttevaer (subscribers only).
Headline photo: IMO.

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