MAJOR international shipping organisations have called on world leaders to urgently examine the role of market-based measures to ensure decarbonisation targets are met across the whole of the global shipping industry. 

Ahead of US President Joe Biden’s Leaders’ Summit on Climate, the shipping bodies want leaders to put their political weight behind the industry’s desire to eliminate 2% of all global carbon dioxide emissions that the sector emits. 

Shipping bodies BIMCO, CLIA, International Chamber of Shipping, World Shipping Council, along with other industry groups, have submitted a proposal to the International Maritime Organization, calling for the UN’s regulatory body to bring forward discussions around market-based measures by several years. These measures will be critical to incentivise the transition of the global fleet to new fuels and technologies, which will be more expensive than those in use today.  

Market-based measures put a price on carbon dioxide emissions to provide an economic incentive for a sector to reduce its emissions by narrowing the price gap between fossil fuels and zero-carbon fuels. 

Shipping leaders believe that now is the time for the IMO member states to consider the role of market-based measures so that measures can be developed and implemented to facilitate the adoption of zero-carbon technologies and commercially viable zero-carbon ships. 

For a pricing signal to work, there must be viable alternatives to fossil fuels. These alternatives do not yet exist for large trans-oceanic ships. Development of alternative technologies would be enabled by a massive acceleration of IMO co-ordinated research and development – to be financed by the industry – so that ocean-going ships will be able to switch to new fuels. To this end, member states and industry have already put forward a mature proposal to create a US$5 billion fund to provide the research and development needed to create the technologies to decarbonise the sector. Industry leaders have also reiterated their call for nations to support this research and development proposal at the IMO. 

The growing need for the consideration of market-based measures at the global level, along with accelerated research and development, is too urgent to ignore. The industry bodies set out in their submission to the UN: 

“The ability to consider different candidate measures in parallel will be critical if [we are] to move forward with the urgency that the challenge of decarbonising shipping requires, given the urgent need to make progress on delivering [our] levels of ambition.” 

In alignment with shipping’s strategy to reach decarbonisation targets already set by governments, the industry is encouraging the world’s largest economies to expand and accelerate applied research and development efforts. 

As market-based measures can take several years to develop and enter into force, implementation of market-based measures and their incentivising impacts will only be able to coincide with the wider introduction of zero-carbon technologies if measures such as the industry-financed research and development fund proposal are approved. 

The shipping groups are calling for any market-based measure to be applied in a fair and equitable way. They echo concerns that have been raised over unilateral carbon pricing schemes, such as the EU’s proposed expansion of its ETS, which is seen by some observers as a market distorting solution to a global problem.