International Maritime Organization (IMO) general secretary Kitack Lim has called for collaboration from all stakeholders in the maritime industry to work together in order to combat the global existential threat from carbon emissions at the World Economic Forum in Davos, Switzerland, this week.
The secretary general’s comments came as UMAS, the partnership between the University College London (UCL) Energy Institute and consultancy MATRANS Ltd, warned that shipping’s transition to zero carbon could cost more than US$1.4 trillion, this week.
In what sounded like a rebuttal of US President Donald Trump’s speech in which he berated the “climate prophets of doom”, Lim told the audience, “When temperature records are routinely broken, icecaps are melting and some parts of the world are flooding while others are burning, there can be little doubt that addressing climate change must be humankind’s major priority.”
The IMO’s strategy to halve the maritime sector’s carbon emissions, from their 2008 levels, by 2050 will be achieved only if shipping works collaboratively across industries, said Lim.
“Ambitious regulatory targets will act as the catalyst for technology, triggering research, development and innovation,” added Lim.
He further emphasised that investment decisions and R&D initiatives must be “cross-sectoral” and that new technologies must be both transferable and scale-able.
The secretary general’s comments chimed with the recent report from UMAS that warned of the high cost of the transition to a low or no carbon future for the industry, with some 87% of the cost being borne by shore-based industries and a smaller, but still significant portion, of 13% expected to be paid via the ship operators.
The report said, the scale of cumulative investment needed between 2030 and 2050 to achieve the IMO target of reducing carbon emissions from shipping by at least 50% by 2050, is approximately USD 1-1.4 trillion, or on average between USD 50- 70 billion annually for 20 years. This estimate should be seen in the context of annual global investments in energy, which in 2018 amounted to US$1.85 trillion.
The report was based on the assumption that ammonia, (NH3) would be the carbon free fuel of choice for the industry, but the report also states that, should hydrogen or other synthetic fuels be developed it would substantially alter the costs for shipping.
Dr Tristan Smith, a reader in energy and shipping at University College London and one of the authors of the UMAS report, told Container News, that wind and other renewables in the UK had been financed by adding a small charge to everyone’s bill and that infrastructure cost was reducing fast, while nobody asked governments to pay to build refineries.
Smith added, “The independent proposal [to add a few dollars to the price of fuel] by the International Chamber of Shipping and the World Shipping Council will not achieve change.”
According to Smith, the carbon price is closer to US$300/tonne and that could bring about new developments in an industry that burns in excess of 300 million tonnes of fuel a year.
The most likely method of funding would be through a kind of hybrid, using public funds and a carbon charge of between US$100-200/tonne of fuel.
Meanwhile, the IMO has praised the maritime industry for its relatively calm transition from high sulphur content fuel to low sulphur fuel, following the introduction of the IMO 2020 Sulphur Cap on 1 January this year.
“Information from various sources has indicated a relatively smooth transition to the 0.50% sulphur limit. Prices for compliant fuels – very-low sulphur fuel oil (VLSFO) and marine gas oil (MGO) rose quickly initially but now appear to be stabilizing. As of 20 January, 10 cases of compliant fuel being unavailable had been reported in IMO’s Global Integrated Shipping Information System (GISIS); and the dedicated email address established by the IMO Secretariat (imo2020@imo.org) has not received any specific correspondence reporting issues with implementation,” said an IMO statement.
Lim added, “I believe it is testimony to the diligence and dedication of IMO, its Member States, the shipping industry, the fuel supply industry and other relevant industries that such a major rule change is being implemented successfully without significant disruption to maritime transport and those that depend on it.”
Lim also warned the industry that the next target, prohibiting the carriage of non-compliant fuel on vessels that are not fitted with scrubbers, exhaust cleaning technology will be banned, on 1 March.
“I urge all shipowners, operators and masters to comply with the carriage ban, where applicable, when it comes into effect. IMO will remain vigilant and ready to respond and provide any support.”
Nick Savvides,
Managing Editor, Container News
