After an inconclusive meeting last week at the International Maritime Organization (IMO), ship owners still have to contemplate their future plans in the fuels arena.
“This week the IMO agreed short term measures to address climate change. For many, it was felt that these measures lacked the ambition needed to reach the IMO’s goal of reducing total GHG emissions by 50% and carbon emissions by 70% by 2050,” said a major shipbroker.
The new concerns come months after the new switch to low Sulphur fuel oils. The IMO had ruled that from 1 January 2020, marine sector emissions in international waters were to be slashed by over 80%.
New IMO short-term measures are intended to improve vessel design and operational efficiency. The new measures have been adopted via the Energy Efficiency Design Index (EEDI), the Ship Energy Efficiency Management Plan (SEEMP), and new measures called the Energy Existing Ship Design Index (EEXI) and Carbon Intensity Indicator (CII).
One of the major issues that still needs to be addressed is carbon pricing. Many industry bodies, regulators, and even individual market players are calling for carbon pricing to be introduced to incentivize uptake in green technology.
Since biofuels, including bio-LNG and bio-MGO are expected to price at a significant premium to conventional fuels, whilst green ammonia and hydrogen will also be significantly more expensive, carbon taxes might be the only way to make future fuels more competitive
However, the IMO is yet to address this issue.
Another major long-term issue is emissions from LNG fuel.
LNG fuel is lower carbon, low SOx and NOx, as well as emitting lower particulate matter. However, recent data shows that emissions can be higher than conventional fuels.
Ultimately, the industry needs is clarity as to where LNG sits within the IMO’s climate goals. Until the industry has more guidance, the best thing many owners can do is nothing, although this is exactly the opposite of what is needed to address climate change.
