Delivering net zero by 2050: The cornerstones of effective IMO GHG Regulations

Delivering on the IMO GHG strategy - decarbonising shipping by 2050

  • Liner carriers are committed to delivering on the 2050 net zero target and are already investing in renewably propelled ships.

  • To ensure there are renewable fuels available to run those ships, in a competitive manner, energy providers must see regulations written in the next two years that demonstrate sufficient demand for new fuels to justify the massive investments needed in the immediate future. 

  • The challenge for member states at IMO is not just to agree, but to agree on regulations that will provide investment certainty. If we can get this right from the beginning, we will speed the energy transition and make it more affordable by avoiding stranded investments.

  • Effective IMO climate policy must rest on solid foundations to build confidence in the path to 2050, incentivise the massive investments needed, and ensure an accelerated transition that brings everyone along to deliver real climate impacts.

The four cornerstones of effective IMO climate policy

  • Create Investment Certainty by Setting GHG-intensity Standards until 2050 Upfront

  • Incentivise Investment with an Effective Economic Measure

  • Enable the Transition with Vessel Pooling

  • Deliver Climate Results with Full Fuel Life Cycle Transparency

Set GHG Fuel Intensity Standards Upfront to Provide Investment Confidence and a Clear Pathway to 2050

Decarbonising shipping will require billions in investments in technology development, vessels, renewable energy production, and supply. Investments are only made if there is confidence and certainty in future requirements. This means that each of the GHG fuel-intensity standards that will apply between now and 2050 need to be defined up front, at the time the regulatory agreement is made.

Leaving future GHG intensity standards to be defined later would not provide the certainty needed to invest with confidence. Demand certainty is essential to both shipowners and energy providers that need to invest in new ships and renewable fuel production to transform the global fleet.

Establish an Effective Economic Measure or GHG Price to Incentivise Investment

To reach our climate targets on time, IMOs financial measure must be strong enough to make it economically rational and attractive for both ship owners and energy providers to invest in fuels and technologies that deliver deep GHG reductions from the start.

The WSC Green Balance Mechanism will achieve the most important task of a greenhouse gas pricing mechanism, completely closing the price gap between fossil fuels and green fuels, making it possible for carriers to operate on fuels that deliver the deepest greenhouse gas reductions from the very start.

This creates a powerful incentive for fuel providers to invest in green energy and fuel supply, accelerating the economies of scale that will push down cost of production and price.

As the Green Balance Mechanism only charges the minimum fee necessary to offset the price differential in a given year, it adds the lowest possible cost to transportation.

Build in Full Life Cycle Transparency to Deliver Climate Results

IMO regulations must drive the best climate impacts, enabling shipowners and fuel providers to make the most efficient and environmentally effective investments.

Regulations that are based on well-to-wake life cycle analysis of all fuels, including biofuels, will enable us to fully understand the climate impacts across fuel production and use. With a holistic view of all fuels, we can avoid stranded investments in fuels or technologies that divert emissions up- or downstream.

Enable the Transition with Vessel Pooling

We can only reach net zero by re-orientating shipping to renewable energy sources. “Pooled” vessel compliance with an IMO low GHG fuel standard will allow companies to invest in innovative zero emission technologies and count the GHG impact across a group of ships. This will enable the necessary transitional investments in step-change technologies and minimise spending on incremental efficiencies with only short-term impact. 

A flexible approach to pooling will enable investments that would not be feasible if each and every vessel must perform at the same level at the same time and will help smaller carriers transition more efficiently.

Moving forward together

Liner shipping wants to decarbonise our industry as soon as possible and we will continue to lead the way in enabling shipping’s transition to zero. But we cannot do this alone, and we cannot do it without the volumes of renewable energy and fuels this transition requires.

If IMO member nations build upon these four cornerstones in developing the future greenhouse gas regulations, the shipping industry and fuel providers will have the necessary investment certainty to reach our goal.

It is time to move from ambition to action and work together to deliver on our shared promise of net zero by 2050.

Our press conference about the Four Cornerstones to Effective IMO Climate Regulations

  • Recently at COP 28, WSC Chair and Hapag-Lloyd CEO Rolf Habben Jansen together with several liner shipping CEOs launched a declaration on decarbonisation as part of the Green Shipping Challenge.

  • Further developing these ideas, WSC has launched its initial paper to the IMO MEPC 81, detailing the four cornerstones that it considers critical to an effective global legal instrument, as a contribution to IMO climate negotiations.

Date: Thursday 7 December 2023

What: Presentation of WSCs new paper to IMO MEPC 81, followed by Q&A

Who: John Butler, President & CEO of WSC and Bryan Wood-Thomas, SVP Environment

Moving forward together