IMO at the crossroads, for green shipping and green fuels
The global maritime community is at a crossroads. In April the International Maritime Organization (IMO) will take some key decisions on how to decarbonise international shipping — and the stakes are high for the green hydrogen industry.
A universal levy is the only option that can consistently generate the necessary revenue to support long-term investment in green fuel adoption and production. It will develop supply chains at scale and create a positive feedback loop that lowers production costs, ultimately closing the price gap between green and higher-emitting fuels and facilitating a just and equitable transition.
A credit trading centric solution, which has also been discussed would not generate sufficient funds to incentivize green fuels. A credit trading mechanism would also make it harder for vulnerable nations to get the stable funding that they need to mitigate disproportionately negative impacts and support for their just transition.
The green hydrogen offtake deal between TotalEnergies and RWE this week will undoubtedly help the market ramp up, especially as green hydrogen begins to be used in new sectors which currently rely almost entirely on fossil fuels.
One of those new markets is shipping where oil in the form of heavy fuel oil currently keep ships moving at the cost of nearly 3% of global emissions.
This use of heavy fuel oil urgently needs to stop and we have had a busy week in London with partners ahead of the crucial meeting at the International Maritime Organization (IMO) which is set to agree measures to shift to “zero or near zero” (ZNZ) fuels such as green ammonia.
Key to these measures is the need for a universal levy on carbon emissions which is the only option that can raise enough revenue to support the business case for long-term investment in green fuel uptake and contribute to a just and equitable transition in lower income countries.
We discussed these issues with UK Maritime Minister Mike Kane MP aboard the Fortescue Green Pioneer, the world’s first dual-fuelled ammonia-powered vessel docked at Canary Wharf.
We urged the UK government to rally support for a proposal submitted by the International Chamber of Shipping, which is backed by many governments, research institutes and campaigning organisations. Now is not the time for a credit trading scheme advocated by some governments which would enable even more use of fossil fuels and false solutions like LNG or unsustainable biofuels due to administrative complexity and price instability which would disincentivize long-term investment from the private sector.
Minister Mike Kane’s visit to the Green Pioneer colleagues from Fortescue and GH2
At a roundtable earlier this week hosted by GH2 and the Skies and Seas Hydrogen-fuels Accelerator Coalition (SASHA) with IMO officials attending, the pros and cons of different options available to the IMO were discussed. At a roundtable earlier this week hosted by GH2 and the Skies and Seas Hydrogen-fuels Accelerator Coalition (SASHA) with IMO officials attending, the pros and cons of different options available to the IMO were discussed (see a report from the roundtable here) Green fuel producers such as Adani, CWP, Fortescue, ReNew and Yara made it clear that they are ready to supply the required volumes of green ammonia to fuel 10% of marine transport by the end of this decade.This was also the central message in the report Green Fuel Producers are ready to provide 10% of marine fuels by 2030 GH2 published.
It is not just fuel developers calling for robust IMO measures. Argus Media, in its reporting from the GH2 roundtable, wrote that a levy has the support of the majority of the IMO member countries, according to the SASHA coalition and GH2.
Joe Williams
Deputy CEO, GH2