There were no major breakthroughs in the on-going discussions about a universal levy at the IMO's Intersessional Working Group on Reduction of GHG Emissions from Ships (ISWG-GHG 18) last week. Any GHG emissions pricing mechanism is going to mean big change for the industry, and a lot of different sectors within shipping will be impacted, MarineLink reported.
InterManager has pointed out, in a paper submitted to the next meeting of the IMO’s Marine Environment Protection Committee (MEPC83 in April), that the role of third-party ship managers needs further consideration.
Roughly 20% of the global fleet is operated by a third-party technical ship manager as the ISM Manager, and work needs to be done to ensure that they are not subject to avoidable litigation. Compared to the charterer and shipowner, the ship manager has no material influence over the GHG intensity of a ship. Ship managers have no say regarding the type of engine powering the managed ship, nor are sails, solar, fuel cells or other installations installed on board. Such choices are decided exclusively by the shipowner.
However, the proposed draft amendments to MARPOL Annex VI on the IMO net-zero framework suggest making ship managers responsible for GHG emissions penalties.
OCIMF, IPIECA (the global oil and gas association for advancing environmental and social performance across the energy transition) and the International Bunker Industry Association (IBIA) have also made a submission to MEPC83. It states: “All participants in the fuel supply chain will see their business change significantly as the 2023 IMO GHG Strategy advances.”
It also highlights that the shipping sector will be competing for common fuels and/or feedstocks with other sectors and therefore the IMO’s mid-term measures must be designed to enable the shipping sector and the fuel supply chain to invest to secure these fuels and not be at a competitive disadvantage.
“It is important to note a production unit is typically designed to produce a specific fuel category and cannot be retrofitted in a cost-effective manner to produce other types of fuels as the production processes are not comparable (i.e. steam methane reforming to produce hydrogen, Haber-Bosch for ammonia, Fischer-Tropsch for e-diesel, gasification, etc.) creating a significant risk of stranded assets that is unlikely to be taken by investors in the absence of long-term predictability.”
And during the transition there will be a need to continue to store and supply conventional petroleum fuels to ensure continuity of supply of marine fuels in sufficient quantities to avoid disruption or non-compliance.
Speaking after the week of intense negotiations at ISWG-GHG 18, Guy Platten, Secretary General of the International Chamber of Shipping (ICS), emphasized the need for urgent progress ahead of MEPC83. Still, he is optimistic: “Despite divergence on many issues, it is encouraging that negotiations continue in a positive and cooperative spirit.”
With only six weeks remaining before the MEPC83 in April, he remains confident that IMO Member States be able to seal the deal and approve fit for purpose amendments to MARPOL.