By Ingrid Sidenvall Jegou et al., Global Maritime Forum, Article No. 108 [UNCTAD Transport and Trade Facilitation Newsletter N°99 - Third Quarter 2023]
In July, Member States of the International Maritime Organization (IMO), the global regulatory body for shipping, adopted the Revised Greenhouse Gas (GHG) Strategy that sets a sectoral target of net-zero emissions by or around 2050. This is not only a crucial step for shipping, a sector that is excluded from the Paris Agreement, but for the international climate collaboration and the global economy.
Shipping accounts for close to 3% of the global GHG emissions and plays a pivotal role in the global economy as the main transporter of energy, food, and materials. In 2018, the IMO adopted an Initial Greenhouse Gas Strategy, setting out to reduce emissions by half by 2050- a significant step at the time, but clearly unaligned with science-based trajectories and with the goals the same countries have signed up to under the Paris Agreement.
Since its inception in conjunction with the adoption of the Initial Strategy, the Getting to Zero Coalition, an industry-led platform for collaboration within the maritime ecosystem, has therefore been urging policymakers at the IMO to adopt a zero by 2050 target, while members have in parallel been showing leadership through action in the form of concrete decarbonization projects. Furthermore, the Coalition, together with its knowledge partner UMAS and the UNFCCC High-Level Climate Champions highlighted the need for an uptake of at least five percent of zero-emission fuels by 2030, recognizing that this is required to put the sector on the right path to reach the long-term goal of zero by 2050.
The IMO has set a clear pathway for decarbonization
Importantly, the Revised Strategy does not only set a 2050 target, it also sets indicative emission reduction targets for 2030 (20% emissions reduction, striving for 30%) and 2040 (70% emissions reduction, striving for 80%), taking all greenhouse gas emissions from the full life cycle, i.e., from production to the combustion of fuels, into account. These targets combined set a clear pathway for the industry and provide a signal that immediate action is needed- 2030 is just around the corner. Besides targets for emissions reductions, the Strategy also now refers to ensuring a just and equitable transition. Furthermore, the IMO agreed on the development of a policy package in the coming two years to achieve these targets.
The Revised Strategy is a key milestone not only for shipping but for global value chains at large. The targets provide industry- be it shipowners, cargo-owners, or energy suppliers- with clarity and help build confidence to invest in the transition. As the targets go beyond carbon emissions from the combustion by vessel only to encompassing all emissions from the entire fuel lifecycle, the Strategy indeed offers a strong demand signal for truly green fuels. By incentivizing investment in energy and fuel production, positive spill-over effects are to be expected also for the land-based energy transition, not least in the global south, where much of the untapped renewables potential can be found.
The Strategy also refers to ensuring that the transition is just and equitable, which is key for the transition to be fully global with no country being left behind.
The Revised Strategy is a major step forward, and an illustration of the key role that public-private partnerships across the whole value chain can play to shape decarbonization, even in hard to abate-sectors.
The energy transition can only happen with the urgency and scale needed if national governments and international regulators establish policy frameworks that make zero emission shipping and fuel production commercially viable and globally available and accessible for all countries and companies alike. A combination of a fuel standard with an economic measure that will put a price on emissions will be explored in the next years. In addition to closing the competitiveness gap between traditional bunker fuels and the more costly clean fuels, a possible pricing mechanism could also generate revenue that can be reinvested into shipping as well as into wider decarbonization efforts, such as green electricity for marine fuels in all parts of the world. Revenues could also be employed to financially support developing countries, especially Small Island Developing States (SIDS) and Least Developed Countries (LDCs).
Delays in international action on climate change will have severe consequences for countries that are already affected by extreme weather events. These countries will be hit especially hard as investments in low-carbon shipping technologies will become more expensive the longer we wait. It is crucial for governments and industries to take immediate action on climate change to mitigate the damaging effects on vulnerable communities and economies. The longer we delay, the greater the economic and environmental impact will be, particularly for those who are most affected.
Public-private partnerships need to keep the momentum going
Yet, the transition to a zero-emission future cannot be achieved based off the IMO’s Revised Strategy alone. As highlighted in the Getting to Zero Coalition’s Transition Strategy (2021), a full and Paris-aligned transition requires a myriad of actions, including at national, regional and industry levels.
During the past years, industry has already started investing in the transition amid regulatory unclarity and a lacking ambition at the IMO. Getting to Zero Coalition members, for example, have been showing leadership through the development of concrete initiatives and collaborations. The fourth edition of the Mapping of Pilot and Demonstration Projects showed a surge in projects across the globe, various zero-emission shipping routes (I.e. Green Corridors) such as the Western Australia-East Asia Iron Ore Green Corridor have been launched and progress in energy supply and financial institutions has been critical. This has provided both governments and the wider industry with the confidence that a full and efficient transition is within reach.
Public-private partnerships are crucial to bridge the gap between the set targets at the IMO and the action needed to achieve a Paris-aligned transition. Such action is necessary for leveraging the Strategy towards zero-emission investments at scale, for the sector to have a chance to meet the tight timeline.
The recent developments at the IMO reflect the leadership shown by the industry in their efforts to decarbonize shipping. The sector is ready to move to a zero-emission future and has provided clear signals to fuel suppliers and cargo owners, as well as the global decarbonization effort. Public-private partnerships are now crucial to push the sector onto a Paris-aligned trajectory to unlock new opportunities and to support the transition for the international community as a whole.
The Getting to Zero Coalition is an industry-led platform for collaboration that brings together leading stakeholders from across the maritime- and fuels value chains with the financial sector and others committed to making commercially viable zero-emission vessels a scalable reality by 2030, towards full decarbonization by 2050. It is managed by the Global Maritime Forum, who initially founded the Coalition together with the World Economic Forum and Friends of Ocean Action.
Ingrid Sidenvall Jegou (Project Director)
Ludovic Laffineur (Senior Policy Advisor)
Femke Spiegelenberg (Project Coordinator)
Ana Madalena Leitão (Project Coordinator)