In July, the International Maritime Organization (IMO) agreed that the shipping industry needs to reach net-zero greenhouse gas (GHG) emissions by 2050. The IMO member states also agreed to finalize a legally binding set of regulations by the end of 2025 and to implement the regulations by the end of 2027. In short, it is time to stop talking about what our ambitions are and to lay out a concrete roadmap for making decarbonization a reality.
Liner shipping companies’ order books already include a high percentage of vessels that will be capable of running on low-GHG fuels. Far less advanced is the progress in creating the fuel supply to meet that demand. In order for energy companies to make the investments necessary to produce large volumes of fuel that are net-zero on a well-to-wake lifecycle basis, those fuel producers have to know that the demand will materialize. That in turn means that the regulations that the IMO adopts must describe at the outset all of the steps in the energy transition.
The energy transition for shipping will likely take two decades once the new regulations are implemented. In order to be effective in decarbonizing the industry, the regulations that the IMO adopts have to do two things: price GHG emissions in such a way that vessels using low or no-GHG fuels can compete commercially with vessels still burning fossil fuels as the energy transition plays out, and include a progressively stricter low-GHG fuel standard that requires a migration to clean fuels. Both regulatory elements must be strong enough that energy suppliers see a clear commercial opportunity in supplying these new fuels.
The IMO is the first global regulator to announce that it will decarbonize the sector it regulates through legally binding regulations. Now the hard work starts.
We will all need to be flexible and creative in finding agreement on the best way to meet that goal, and at the same time we must be firm in insisting that the task is not simply to agree, but to agree on regulations that actually solve the problem.