The UK has called for zero emissions from the global shipping fleet by 2050 but achieving this ambitious target will require industry and policymaker action and probably market-based measures (MBMs), a marine finance executive said Sept. 13.

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The UK backs a world-leading absolute zero target for international shipping emissions by 2050, which would need to be agreed by the International Maritime Organization, the UK government said in a statement Sept. 13.

This could be a tall order. "It's an extremely ambitious target and not dependent solely on [the] shipping industry to deliver it," Tony Foster, CEO and CIO of marine asset manager Marine Capital said on the sidelines of a panel discussion during London International Shipping Week 2021. "Policy and regulation have to play a major role, including, almost certainly, carbon taxes."

Other entities have also made similar targets. Container line A. P. Moller-Maersk is targeting net zero emissions by 2050.

Currently, the IMO is targeting a 50% reduction in greenhouse gas emissions from the global fleet by 2050, compared with 2008 levels.

Potential fuels required for the energy transition in shipping include renewable methanol and renewable ammonia.

These imply an increase in prices if fuels are to be sustainable. Small ammonia plants, for example, will likely start emerging worldwide in 2025 and be able to produce green ammonia at $650-$850/mt ($34.95-$45.70/Gj), the Korean Register of Shipping, a not-for-profit ship classification society, said earlier in 2021.

By comparison, S&P Global Platts assessed delivered 0.5% sulfur fuel oil at Rotterdam at $515/mt ($11.81/Gj) Sept. 10, conventional methanol T2 FOB at $453.05/mt ($21.11/Gj), and conventional LNG as a bunker fuel at $895.64/mt ($17.52/Gj).

There has been growing momentum for MBMs to abate the price difference. Shipping trade associations have submitted proposals for a global levy based on MBMs on emissions from shipping, amid a significant price gap between conventional and renewable fuels.

The International Chamber of Shipping and INTERCARGO -- the trade association for bulk carrier operators -- submitted the proposals, which would be the first for any industrial sector, to the IMO, the ICS said Sept. 6.

The European Commission recently proposed to extend the EU Emissions Trading System to international shipping. ICS said a mandatory global levy based on MBMs was "strongly preferable" to their regional application.

However, market observers have said that progress at IMO level has been slow. A proposal by the Marshall Islands and Solomon Islands to introduce a levy of $100/mt of CO2 equivalent on oil used as a bunkering fuel was not adopted by the IMO's Marine Environment Protection Committee. It is due to be discussed at an inter-sessional working group in October.

Platts assessed voluntary CORSIA-eligible carbon (CEC) credits at $6.95/mtCO2e Sept. 10.