Class News No. 06/2018

 

17 April 2018

IMO GHG Strategy – What does it mean?

Applicability: Shipowners, operators and managers

Key highlights

  • A clear signal of the industry’s commitment to reduce GHG emissions from international shipping by ending the use of fossil fuels by mid-century
  • At least 50% reduction by 2050 which equates to 85% reduction in carbon intensity
  • Broad Government and Industry support for decarbonisation
  • Under 5 years to deliver initial GHG reduction plan
  • Will be reviewed in light of further evidence for example IPCC 1.5oC report in September this year
  • A revised Strategy is to be adopted in 2023
Pathways graph

How ambitious is this?

Shipping currently accounts for 2.3 % of global CO2 emissions. However, all the future scenarios in the IMO Third GHG study 2014 anticipate rising emissions; from 50-250% by 2050 under a business as usual scenario. The Paris Agreement temperature (stabilising temperatures to well below 2oC and aiming for 1.5oC) goals place a challenging decarbonisation burden on all sectors. 

This sector deal represents a significant ambition for the shipping sector by setting a GHG reduction pathway of at least 50% by 2050 based on a 2008 baseline, with a strong emphasis on reducing to 100% by 2050 if this can be shown to be possible. This puts the shipping sector on course for a 2oC pathway, as shown in Low carbon pathways 2050.

This deal provides a clear signal to the industry that the overarching aim is ending the use of fossil fuels. In order to achieve this zero emission vessels need to be entering service by 2030. Anyone planning to finance, design or build a ship in the 2020s will need to consider how it can switch to a non-fossil fuel later in its operational life.

Is a 1.5oC pathway still an option?

The Strategy leaves open the possibility of being able to keep global average temperature increases within this limit. Short-term measures to implement the Strategy will be needed to urgently peak and reduce GHG emissions in line with a 1.5oC pathway before 2023. This will be dependent on future IMO meetings and the ability to agree to implement policy measures.

The Strategy will be reviewed in light of the UN IPCC 1.5 Report in September this year, which will likely be helpful in strengthening it.

What does ‘at least 50%’ mean?

This means at least 50% reduction in GHGs by 2050 from a 2008 baseline. Under a 2oC pathway, 50% means shipping’s share of net CO2 emissions is likely to grow from current 2.3% share to around 10% by mid-century. This is a significant reduction relative to the growth under a business as usual scenario.

A 50% reduction could help achieve the ‘well below’ 2oC temperature goal if other industry sectors and countries are able to reduce emissions faster to compensate. Further strengthening of the Strategy could result in a commitment of 100% reduction by 2050 depending on evidence available over the next 5 years.

How will we deliver ‘at least 50%’?

IMO is expected to start developing legally binding measures, which could include increases to ships technical and operational efficiency, a low and zero-carbon fuels implementation programme, national action plans and market-based measures. These would be in addition to existing measures on energy efficiency (EEDI and SEEMP).

The IMO fuel consumption data collection scheme which entered into force on 1 March 2018 requires all ships to monitor and report fuel consumption.

Voluntary action by the industry and governments will also help deliver technology and infrastructure to deliver the Strategy objectives.

When does this start?

The adoption of the initial Strategy agrees to achieve GHG reductions with short term measures being implemented between 2018 – 2023. This will require rapid development of regulations.

The IMOs 4th GHG study is due to be completed in 2020 and the first data collection reporting period is 2020 – both of these will provide evidence to define immediate policy action.

Will we see carbon pricing in the near future?

The Strategy lists market based measures as one of the candidate measures in the long-term (beyond 2030).

These have benefits for making the business case to move to a potentially more expensive fuel / technology, whilst also raising funds for R&D programmes, infrastructure development and deployment.

Other policy measures will also be explored that could achieve the same outcome, so a carbon price is not certain.

What will ships of 2050 look like?

They will look very different to today. It is hard to predict the future but we expect to see a diverse range of zero-carbon technologies / fuels deployed across the world’s fleet. For example; batteries, hydrogen, ammonia, sustainable biofuels and sail.

There are a range of innovative technologies already being piloted and deployed and we expect the curve of technological innovation to increase with the adoption of this strategy.

Fuels graph

 

For further information

Contact katharine.palmer@lr.org 

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