In December 2019, the international shipping industry presented a proposal to establish the first global research and development fund to put shipping on track to achieve the sector’s climate targets and to transform it into a carbon-free mode of transport as quickly as possible. The fund, with a target volume of roughly USD 5 billion, would be financed by shipping companies across the world over a 10-year period. Among the organisations presenting the initiative was the International Chamber of Shipping (ICS), of which the German Shipowners’ Association (VDR) is an important member.
Highlights of the proposal:
- Establishing a non-governmental R&D organisation to pave the way for shipping to become the first mode of transport without greenhouse gas (GHG) emissions
- Endowing the fund with almost USD 5 billion in core funding, financed by shipping companies around the world
- Objective of the fund: To accelerate the development of new, urgently needed fuels for commercially viable zero-GHG-emission vessels, which must be available by the early 2030s
Around 90 percent of all goods in international trade are transported by ship. At the same time, the global shipping industry is responsible for roughly 2 to 3 percent of the world’s anthropogenic CO2 emissions. To achieve the climate-protection goals of the Paris Agreement, rapid decarbonisation will be crucial – and this also applies to the international shipping sector. It is the responsibility of the UN’s International Maritime Organization (IMO) and its member states to regulate the reduction of greenhouse gas emissions from international shipping effectively, as this task cannot be delegated to individual states.
The industry-wide push by shipping associations is needed to be able to achieve the ambitious CO2-reduction targets already agreed by IMO member states in 2018. These targets include a range of measures, such as at least halving the shipping sector’s global CO2 emissions in absolute terms by 2050 compared to 2008 regardless of the anticipated increase in global trade volumes. This target for 2050 will make it necessary to achieve a huge increase in the efficiency of ships, but such an increase will not be possible if merchant shipping continues to use fossil fuels for a long time to come.
The IMO goals therefore require the introduction and adoption of new fuels, technologies and propulsion systems that are as carbon-free as possible, such as green hydrogen, ammonia, fuel cells, batteries or other synthetic fuels generated from renewable energies. However, such fuels do not yet exist in a form or at a sufficient scale to be used by large commercial ships operating internationally.
In order to meet the IMO climate targets, the shipping sector proposes as an effective tool for decarbonisation the establishment of an International Maritime Research and Development Fund (IMRF) to serve as a non-governmental R&D organisation, which would be overseen by the member states of the IMO. According to the proposal, the IMRF should be financed by shipping companies worldwide via a mandatory R&D contribution of USD 2 per tonne of purchased marine fuel, with the goal being to use the funds to amass the targeted amount of USD 5 billion in core funding over a 10-year period.
The R&D scheme and its funding are an initiative of the leading international shipowners’ associations, which collectively represent over 90 percent of the world merchant fleet. These are:
- CRUISE LINES INTERNATIONAL ASSOCIATION
- INTERNATIONAL CHAMBER OF SHIPPING
- INTERNATIONAL PARCEL TANKERS ASSOCATION
- WORLD SHIPPING COUNCIL
Additional stakeholders are both able and very welcome to participate in this initiative.
In its proposal to the IMO, which was submitted in December 2019, the shipping industry has already made detailed recommendations on the governance and financing of the fund. The shipping industry hopes that the IMO member states will as quickly as possible approve its proposal. One possible means of implementing it would be to adopt supplementary regulations to the existing International Convention for the Prevention of Pollution from Ships (MARPOL).
You can find more information about the fund here on the ICS website.