The IMO's revised decarbonisation strategy: good progress, but some way to go to fulfil our duty to the climate
7 July 2023
The International Maritime Organization (IMO) has reached an agreement on a revised decarbonisation strategy for the shipping industry. While some progress has been made, there are concerns that the agreed strategy fails to align with the climate goals outlined in the Paris Agreement – and critically don’t align our sector with a 1.5-degree future.
Instead of providing a clear pathway to net-zero emissions, the agreed-upon "indicative checkpoints" merely aim for reductions of 20% by 2030 and 70% by 2040, with ‘stretch goals’ of 30% and 80% respectively. This, combined with loose wording in the strategy, means that it offers only a partial solution; a lantern lighting part of the future rather than a lighthouse to get us to net zero.
In some senses it’s worth celebrating the progress made at MEPC 80. We do now have some clarity and to see nations get around the table and agree on a way forward was encouraging and must not be underestimated.
However, with the IMO only incentivising a minimum baseline for action, the onus is now on us as an industry to go further and increase our collective decarbonisation ambition. It is therefore crucial that we view the outcomes of MEPC 80 as a foundation rather than a ceiling for action. There is already a growing demand for solutions that can expedite the journey towards net-zero emissions, and the industry must capitalise on this momentum by aiming for those higher 2030 and 2040 targets, not for baseline compliance.
This includes doing as we have promised and explore a carbon levy, and ensure that there can be certainty around investments and development in the technologies and solutions the sector needs to decarbonise. If we can make it a reality, a carbon tax will provide crucial funding for the necessary fuel and technology needed to directly decarbonise ships. Estimates from the World Bank suggest that a levy of $100 per metric ton of carbon dioxide emitted by ships will raise approximately $1 trillion by 2050. This substantial funding, if realised, will account for approximately one-third of the total investment needed for decarbonisation in the shipping sector.
At the same time, we must also keep an eye on the role that other regulators will now look to play. Influential entities like the European Union and the United States may proceed with their own emission reduction strategies for maritime transport that exceed the IMO’s ambitions. This fragmented regulatory landscape will amplify complexity and creates hurdles in the maritime energy transition. Vessels operating in different regions could be subject to varying emissions standards, compliance measures, and reporting requirements. Such disparities increase operational challenges, compliance costs, and overall inefficiency.
While the IMO's revised decarbonisation strategy represents a step forward, it falls short of the ambition required to align our sector with the Paris Agreement. We must use the clarity that MEPC 80 has provided us as the building blocks for further development, not rest on our laurels, and do everything in our power to collectively make global trade green.