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Shipping industry proposes $5 billion clean fuel fund


Marine transport sector targets decarbonization by 2050

$2/mt fee on marine fuel to fund 10-year R&D program

Industry eyes zero-carbon ships by 2030s

  • Author
  • Frank Watson    Robert Perkins
  • Editor
  • Zac Aiuppa
  • Commodity
  • Shipping
  • London — The global shipping sector has proposed creating the world's first collaborative research and development program to help slash CO2 emissions from maritime transport, which, if adopted, could transform the fuels used to power the global trade in goods.

The move comes amid International Maritime Organization targets to cut the industry's greenhouse gas emissions by 50% from 2008 levels by 2050, a goal that requires a massive growth in cleaner fuels including hydrogen, fuel cells and batteries.

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Currently, the bulk of the world's shipping is fuelled by a 300-million-mt/year heavy fuel oil, or bunker market.

A "large proportion" of the global shipping fleet would need to be using carbon-free fuels by 2050 in order to meet the IMO target, a group of international shipowner associations said in a joint statement Wednesday. If met, the IMO target would likely mean a complete phase-out of fossil fuels in shipping soon after 2050, according to the shipping associations.

"The 2050 target will require a carbon efficiency improvement of up to 90%, which is incompatible with a continued long-term use of fossil fuels by commercial shipping," the statement said.

International maritime transport carries around 90% of global trade and is responsible for about 2% of the world's man-made CO2 emissions.

To achieve the 2015 Paris Agreement's climate change goals, rapid decarbonization is vital, and this includes international shipping, said the group, which includes BIMCO, the International Chamber of Shipping and the World Shipping Council.

In 2018, countries agreed to CO2 reduction targets for shipping under the industry's regulator, the UN International Maritime Organization.

"These ambitious IMO targets include an absolute cut in the sector's total greenhouse gas emissions of at least 50% by 2050, regardless of trade growth, with full decarbonization shortly after," the group said.

Meeting the IMO's emissions reduction goals will require the deployment of new zero-carbon technologies and propulsion systems, such as green hydrogen and ammonia, fuel cells, batteries, and synthetic fuels produced from renewable energy sources, it said.

"These do not yet exist in a form or scale that can be applied to large commercial ships, especially those engaged in transoceanic voyages and which are currently dependent on fossil fuels," it said.

In the absence of suitable mitigation policies, emissions associated with the shipping sector could grow between 50% and 250% by 2050, the International Renewable Energy Agency (IRENA) said in October.

That's why the sector needs to push funding into a major international R&D program to get cleaner fuels up and running.


The shipping sector is proposing the establishment of an International Maritime and Development Board -- a non-governmental R&D organization that would be overseen by IMO member states.

The IMDB would be financed by shipping companies worldwide via a mandatory contribution of $2/mt of marine fuel purchased for consumption by shipping companies, which would generate about $5 billion in core funding over a 10-year period, the group said.

With an average life of around 25 years for a commercial ship, zero-carbon models would need to start entering the market by the end of the new decade.

The funding will be used to catalyze the deployment of commercially viable zero-carbon ships by the early 2030s, it said.

The group has proposed the R&D program to the IMO, which it said can be put in place by 2023 via amendments to the existing IMO Convention for the Prevention of Pollution from Ships (MARPOL).

The shipping industry's proposal will be discussed by governments in London at the next meeting of the IMO Marine Environment Protection Committee in March 2020, it said.

Shipping companies are already developing pilot programs to test the viability of cleaner fuels.

Danish container line Maersk in November said it would install a 600 kWh marine battery on board one of its vessels in December to improve performance and reduce carbon emissions, although propelling ships with battery power alone was still years away, it said.

-- Frank Watson,

-- Robert Perkins,

-- Edited by Zac Aiuppa,