The inconclusive meeting held last week at the International Maritime Organisation (IMO) resulted in shipowners reevaluating their plans.
A major shipbroker, Gibson said, “This week, the IMO agreed on short-term measures to address climate change. For many, it felt that these measures lacked the ambition needed to reach the IMO’s goal of reducing total GHG emissions by 50% and carbon emissions by 70% by 2050.”
The IMO had ruled that from 1 January 2020, marine sector emissions in international waters were to be slashed by over 80%. This resulted in having the new concerns to surface months after the recent switch to low Sulphur fuel oils.
The short-term measures are to improve vessel design and operational efficiency. There will be stricter newbuilding designs adopted via the energy efficiency index (EEDI), the Ship Energy Efficiency Management Plan (SEEMP). New measures included are called the Energy Existing Ship Design Index (EEXI) and Carbon Intensity Indicator (CII). This will ensure that newbuild efficiency continues to improve but there is no update on any estimated implementation start date.
Gibson also stated, “What is needed is clarity on what the IMO’s medium and longterm measures will look like to give owners the confidence to invest in the next generation of vessels.”
Carbon pricing is one of the major issues that has yet to be addressed. Many significant stakeholders in the industry, such as regulators and even individual market players, call for carbon pricing to be introduced and encourage more green technology uptake.
IMO has yet to also address the premium prices of bio-LNG, green ammonia, and hydrogen compared to conventional fuels. It is suggested that carbon taxes might be the only solution to make future fuel prices more competitive.
Ultimately, the emissions from LNG fuel is the issue that needs to be addressed in the long run. According to a study by the International Council on Clean Transportation, over a 20-year timeframe, using LNG might pose zero benefits when upstream and downstream emissions are being accounted for.