The Week in Alternative Fuels 16 February 2024
Maritime regulatory discussions indicate that a carrot-and-stick policy approach can speed up shipping's decarbonisation and green fuel adoption. The IMO can penalise emitters for their emissions, and nations can reward early adopters of alternative bunker fuels.
PHOTO: Houston Ship Channel. Port of Houston
A number of proposalssubmitted to the IMO explore options to enhance and implement mid-term measures such as a greenhouse gas (GHG) fuel standard and an emission pricing mechanism that ensures emitters are held accountable. Canada stressed in its IMO proposal that these mid-term measures are urgently needed and should be "stringent" enough to help shipping reduce its emissions in line with the Paris Agreement. The mid-term measures should also drive companies to increase the uptake of alternative fuels onboard vessels, it wrote.
Other proposals have urged the IMO to regulate shipping's methaneemissions, update shore power guidelines, and make wind power installations count in emission calculations. The IMO has also been asked to mandate use of an onboard emission tracking system to monitor shipping emissions in real time.
The IMO's Marine Environment Protection Committee (MEPC) will discuss these topics and other ways of regulating shipping emissions at its 81st session next month. It is expected that these measures will be adopted by the end of next year and take effect in 2027.
Regulators at the regional level are better positioned to encourage alternative fuel adoption through incentives, a recent Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping (MMMCZCS) study suggested. The study found that regional regulations like the US’ Inflation Reduction Act (IRA), which provides a supply-side incentive, combined with FuelEU Maritime, which gives a demand-side incentive, could be the driving force needed to promote the scaling up of supply and uptake of green marine fuels with zero-emission potential.
The US IRA is designed to promote production of low- and zero-emission fuels in the US by giving tax breaks and subsidies to producers. The MMMCZCS report estimated that these IRA subsidies can offer tax credits of up to $16/gigajoule to green ammonia, e-methanol and e-methane producers, encouraging them to increase production of these fuels to meet shipping's burgeoning demand.
The World Shipping Council recommended that EU regulators develop a supply-side regulation similar to the one in the US that will boost green fuel production in the EU. It also asked the IMO to consider the EU's emission-reduction goals when developing a GHG fuel standard and carbon pricing mechanism.
By Konica Bhatt
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