WSC: We need to get regulations right in next two years to ensure renewable fuels’ availability

In a bid to secure a competitive landscape for the availability of renewable fuels to power maritime vessels, energy providers need to have regulatory frameworks established within the next two years. The call comes with the recognition that substantial investments in new fuels are imminent, contingent on the assurance of sufficient demand.

Illustration; Image by Offshore Energy

“To ensure there are renewable fuels available to run those ships in a competitive manner, energy providers must see regulations written in the next two years that demonstrate sufficient demand for new fuels to justify the massive investments need in the immediate future. The challenge for member states at IMO is not just to agree, but to agree on regulations that will provide investment certainty. If we can get this right from the beginning, we will speed the energy transition and make it more affordable by avoiding stranded investments,” says John Butler, President & CEO of the WSC.

The World Shipping Council (WSC), the voice of liner shipping, has published its first contribution to negotiations at IMO MEPC 81, with a paper outlining four cornerstones critical to an effective IMO GHG agreement.

The four pillars of the WSC paper MEPC 81/7/2 include:

  1. Set GHG Fuel Intensity Standards Upfront to Provide Investment Confidence and a Clear Pathway to 2050

WSC emphasizes the necessity of establishing Greenhouse Gas (GHG) fuel intensity standards. The imperative arises from the substantial investments required for technology development, vessels, and renewable energy production to decarbonize shipping. These investments hinge on confidence and certainty in future requirements.

To ensure this, WSC asserts that each GHG fuel-intensity standard applicable from now until 2050 must be clearly defined at the time of regulatory agreements.

WSC contends that upfront definition of these standards is crucial, providing shipowners and energy providers the demand certainty needed to invest in new ships and renewable fuel production, thereby facilitating the transformation of the global fleet.

  1. Establish an Effective Economic Measure or GHG Price to Incentivise Investment

To reach the climate targets on time, IMO’s financial measure must be strong enough to make it economically rational and attractive for both ship owners and energy providers to invest in fuels and technologies that deliver deep GHG reductions from the start.

 WSC believes that the measure or carbon price must be designed to provide a level playing field globally, so that vessels operating with the most advanced low-GHG technologies and energy sources can compete commercially with vessels running on traditional fuels.   

To achieve this, IMO regulations must evaluate and reward a given ship or group of ships based on the GHG reduction achieved, including GHG reductions that exceed the specific standard required at a given point in time, the organization insists.

  1. Enable the Transition with Vessel Pooling

WSC insists that “pooled” vessel compliance with an IMO low GHG fuel standard will allow companies to invest in innovative zero-emission technologies and count the GHG impact across a fleet of ships.

This strategic flexibility aims to minimize expenditure on incremental efficiencies with only short-term impact. The proposed approach is expected to ensure that investments previously deemed unfeasible become viable, particularly for smaller carriers striving to transition more efficiently.

  1. Build in Full Life Cycle Transparency to Deliver Climate Results

IMO regulations must drive the best climate impacts, enabling shipowners and fuel providers to make the most efficient and environmentally effective investments.

WSC calls for regulations grounded in comprehensive life cycle analyses, encompassing all fuels, including biofuels. This approach ensures a thorough understanding of climate impacts throughout fuel production and usage, preventing investments in fuels or technologies that could lead to emissions diversion.

Highlighting the importance of the IMO GHG Strategy’s timeline, WSC urged member nations to adhere to the set schedule—implementing the necessary regulatory framework by 2025 for full implementation in 2027—to realize the vision of a decarbonized shipping industry by 2050 and safeguard our climate.

“Liner shipping wants to decarbonize our industry as soon as possible and we will continue to lead the way in enabling shipping’s transition to zero. But we cannot do this alone, and we cannot do it without the volumes of renewable energy and fuels this transition requires. If IMO member nations build upon these four cornerstones in developing the future greenhouse gas regulations, the shipping industry and fuel providers will have the necessary investment certainty to reach our goal. It is time to move from ambition to action and work together to deliver net zero by 2050,” says Butler.