Industry groups back fund worth ‘billions’ for zero-emission R&D
A proposal to set up a fund to support research and development into zero-emission ships is due to be submitted to IMO today (18 December) for discussion at the next meeting of IMO’s Marine Environment Protection Committee (MEPC 75) in April 2020. If it is eventually adopted and enters into force as an amendment to MARPOL, it would establish a levy on every tonne of bunkers worldwide.
It is backed by eight industry organisations – BIMCO, CLIA, ICS, Intercargo, Interferry, Intertanko, IPTA and WSC – and they propose the levy should be $2/tonne, which they say would raise about $5Bn over 10 years.
In the introduction to their 30-page submission, the backers say that to reach the 2050 ambition of cutting carbon emissions from shipping by at least 50% “it will be necessary to develop a suite of low-carbon and zero-carbon technologies and fuels” but that “the technologies necessary to achieve these ambitious goals do not yet exist in a form or scale which is commercially viable for widespread use by international shipping.”
Speaking during a conference call yesterday, the secretary-general of the International Chamber of Shipping (ICS), Guy Platten, acknowledged that “in the past [shipping has] been slow to respond to the threat of global heating” but now “the industry has definitely got the memo [and] we will match the ambitions of the rest of the world in meeting its carbon objectives.”
He said the fund supporters’ goal is to “accelerate the development of commercially viable zero-carbon fuelled ship by the early 2030s” and he set out some of the potential technologies that could be funded by the scheme: green hydrogen, ammonia fuel cells, batteries and synthetic fuels created with renewable energy sources.
The fund would be managed by a non-governmental R&D organisation, to be called the International Maritime Research and Development Board (IMRB), which would be overseen by IMO member states. Every ship would have an account at the IMRB, linked to its unique IMO number and coupled to IMO’s fuel oil data collection system to confirm that the right amount had been paid.
Shipowners would be responsible for paying the levy directly into the fund, with flag states issuing statutory certificates that could be checked by PSC inspectors to confirm that payments had been made.
Asked how this would work when charterers are responsible for buying fuel, ICS deputy secretary-general Simon Bennett said that the R&D fund payments would in practice “be paid by the entity that is paying for the cost of the fuel” and would be included in charterparties. He said that informal talks had been held with “the big charterers” and was confident of their support. “It suits their CSR and environmental responsibilities,” he said.
As for its reception by at MEPC 75, “we are hoping … that member states will acknowledge our proposal and … won’t reject it completely” at that stage, he said. The meeting will have other significant priorities on its agenda but he hopes “they will agree to a more detailed discussion at the next session” in October 2020.
Nonetheless, “we wouldn’t be making this proposal if we didn’t think it had a serious chance of being accepted,” he said. “Governments will no doubt want to make some changes to this proposal, but ultimately we are optimistic that this proposal … will be satisfactory to member states on all sides.” One motivation for member states to support it, he suggested, is that “it does provide a pathway” to achieving IMO’s 2050 target.
Asked how the money would be spent and accounted for, Mr Bennett told ShipInsight that the IMRB will be responsible for those decisions. It will be a “a fully fledged organisation with a professional staff” that will make grants to support research. Based on analysis carried out by consultants, the proposal’s backers expect that it will take about 200 “major research and development projects to take us into a place where we have a possibility of zero-carbon ships entering the market in the 2030s,” he said.
That is little more than a decade away, which is “the reason for trying to kickstart this research and development on a scale now,” Mr Platten told ShipInsight. It will be a time-limited project, he added, “because once all the technology is in place, there will be no need for the fund.” He estimated it will have a lifespan of at least 10-15 years and acknowledged that, if the project is successful, as zero-carbon ships become more common, demand for bunkers – and the fund’s associated levy income – will fall.
ICS chairman Esben Poulsson believes that commercial benefits will follow from the new technologies that will emerge from the project. “Numerous research institutes and large shipowners [are] investing heavily in finding the solution to this problem because fuel is the biggest single expense that a shipowner has,” he pointed out, so there is a commercial incentive to reduce its use.
“We in the shipping industry are pragmatic and we are not into empty gestures,” he said, and the proposal “is robust and is appropriate to put it forward to a global regulator.”
• Read the submission via the ICS website.