By now, the final legal formalities for the adoption of new global measures to reduce greenhouse gas emissions from ships should have been completed. Carriers, forwarders and shippers around the world should have been busy assessing carefully what the impacts of the International Maritime Organization's ‘Net Zero Framework’ would be on their operations. And the world could be looking forward to a reasonably robust plan to tackle one of the most difficult industrial sectors to decarbonize - international deep-sea shipping.
Instead, the meeting at IMO's headquarters in London last month, where this should have happened, ended in acrimony, anger and disbelief at the tactics used by some countries to prevent the binding amendments to the International Convention for the Prevention of Pollution from Ships (or MARPOL) from being adopted.
In the end, the meeting was 'adjourned for twelve months' - a diplomatic way of saying we are not going to agree, so let's take time out to see what can be salvaged and meet again in a year or so to have another go". Maybe. In reality, the differences between nations seem to be more of principle than practicalities and therefore unlikely to yield because of some massaging of the requirements or of the pace and scale at which shipping emissions are reduced. It could be that the Net Zero Framework is dead in the water.
The IMO Net Zero Framework is (was?) a hugely complex emissions trading scheme, the result of over ten years of technical finessing and intense political negotiations by national delegations at the IMO's Marine Environment Protection Committee. Simply put, from 2027, every ship owner would need to record the emissions from each of their vessels, report them to the flag state authority in which the ship is registered who would compare them to a target level set for that year by the NZF. If the ship's emissions exceeded the target, then the owner would need to buy from IMO emission credits to cover the excess. If they came in better, then the owner would get credits for the over-performance, which they could bank, sell or use for underperforming ships in the fleet.
There would be additional costs for really badly performing ships and cash payments from the funds collected for owners using truly 'green' fuels, able to reach the very low levels of emissions needed to achieve net-zero by around 2050. The objective is to provide stiff financial penalties that steadily increase over the next twenty-five years for shipowners who don't decarbonize their fleet at the expected rate. In practice, this will make many older ships uneconomic to operate and likely to be scrapped, to be replaced by those running on the 'Zero or Near Zero' emission fuels like green hydrogen or green ammonia. (This all assumes that the higher costs are not simply passed on to shippers in the form of higher rates and surcharges and that there is some real financial pain incurred by shipowners. Nothing to worry about there then!)
The Net Zero Framework invited the shipping industry to gamble that these incentives would be enough to ramp up the production and supply of green fuels at a rate that kept pace with the arrival of the new ships able to use them. It was lauded (and lambasted) for being the first global carbon tax. It would also have been the first time a sector had committed itself to rapid decarbonization where no obvious alternative fuel supply was available, in the quantities required, in locations around the world and hopefully at costs lower than the 3-4 times multiples over conventional fuels that they currently are.
Many shipping lines have already committed to achieving net-zero goals on their own initiative, but these commitments would have assumed global regulations were in place to help drive the market. That may still happen, but more likely the regulatory pressure will now be more regional, like the European Union's FuelEU Maritime regulation and its longer-established Emissions Trading Scheme.
WiseTech Academy's course on Reducing Greenhouse Gases in the Global Supply Chain provides much more detail on the mechanics of decarbonizing maritime shipping and international aviation. If you are looking to reduce your supply chain's carbon footprint, this is a good place to start, because right now it doesn't look as though the regulators are going to do the job for you.
James Hookham is a Director of TenTenFifteen, providing guidance and support on international trade and transport to shippers and forwarders around the world. He has been a professional representative of the trade and logistics sector for over 30 years, first as a Deputy Chief Executive of the Freight Transport Association (now Logistics UK) and since 2018 as Secretary General of the Global Shippers Forum, the voice of cargo owners in international supply transport.
He is a graduate in Environmental Science from the University of Bradford and completed a Masters degree in the safe transport of dangerous goods at the University of Manchester.