You don’t always get a second chance to make history unless, it seems, you are the UN’s maritime organisation. The question everyone is asking now is whether countries at the International Maritime Organization (IMO) will learn from past mistakes and seize the billion-dollar opportunity that’s in front of them.
Over a year ago, the IMO made global headlines when governments agreed on what would be the world’s first global carbon price on any polluter: the Net-Zero Framework (NZF) for global shipping.
The NZF was designed to help step up the clean transition of this heavy polluter, responsible for roughly 3% of global emissions annually. And somewhat more crucially, the mechanism would generate revenue that could be used to support the maritime transition, as well as deliver a new source of climate finance: around $12 billion a year. This funding is crucial to ensure a just and equitable transition in the industry, assisting countries with zero-emission shipping upgrades and building broader clean energy transition and resilience.
Despite much support for the NZF, countries were unable to achieve consensus to get the framework across the finishing line last year. The adoption was delayed by 12 months after a diplomatic assault on the negotiations from the U.S. and its petro-state allies, who vehemently oppose any regulation that would see a rapid, and much-needed, decrease in oil demand in shipping.
Despite this upset, the NZF agreement still remains on the IMO’s negotiating table and it can still be adopted later this year.
As governments return to London next week and again in November and December to debate the future of the agreement, it is vital that they keep their eyes on the target that has been years in the making, and they don’t get distracted by false promises of lowering ambition in the name of making compromises.
The truth is that the NZF is already a compromise reached after years of negotiations. As it stands, however, the framework is not yet aligned with the Paris Agreement, meaning that it does not put shipping on track to limit global temperature rise to 1.5°C by the end of the century. Nor is it aligned with the IMO’s own emissions reduction targets set in 2023.
What the NZF does achieve, however, is a delicate balance between the extremes of ambition and conservatism which marked the IMO discussions for years. It also sets binding emissions intensity reduction targets for ships and generates much-needed finance.
Crucially, once adopted, it can be strengthened to bring it back in line with legal obligations under the Paris Agreement and the IMO’s own decarbonisation targets.
Four legislative amendment proposals have been submitted ahead of the upcoming round of discussions. Our recent analysis showed that three of them — namely proposals put forward by Tuvalu, Brazil and Australia — would preserve, to varying degrees, the design and ambition of the NZF. These options would give the industry the fighting chance to make progress towards its 2050 net-zero target and support a just and equitable transition for climate-vulnerable countries.
One of them would not. The proposal submitted by Liberia suggests an entirely different policy architecture for the NZF: one that weakens incentives for zero-emission energy, undermines predictability for future energy investments, and removes the carbon pricing mechanism capable of generating revenues.
The proposal goes against the commitments made by countries at the IMO just three years ago and would undermine shipping’s transition.
Those with most to lose in this approach would paradoxically be developing countries, including Liberia, who need NZF revenues to navigate and succeed in shipping’s transition and to drive green growth nationally.
In addition to these four legal proposals, there’s also a proposal from Japan. However, because it was not submitted alongside the other texts, IMO rules mean that it cannot be considered for adoption this year.
But considering that this proposal has similar weaknesses to those in Liberia’s paper in terms of weak energy transition and no equity, it too merits words of warning.
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The biggest red flag with this proposal is that it replaces the revenue-generating carbon price with a “voluntary contribution,” leaving it up to individual shipowners to decide which project would receive funding. The obvious downside of this, besides generating less revenue than the NZF, is that companies will be incentivised to invest it in the industry for profit, rather than for broader climate projects and for public good. Again, this would be a major blow to developing countries.
And there are other issues with this proposal, such as insufficient incentives for zero-emission energy and adding complexity and unpredictability into the carbon trading system.
Fundamentally, there may be several options on the table for the forthcoming negotiations. But if countries want to deliver a just and fair transition for the maritime sector, there really is only one choice: back the Net-Zero Framework and stand together in solidarity against those who would tear it apart.
Editor’s Note: The opinions expressed here by the authors are their own, not those of impakter.com — Cover Photo Credit: william william.
