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ICCT on IMO’s newly revised GHG strategy: What it means for shipping and Paris Agreement

Success in decarbonizing shipping will likely require international rules complemented by more ambitious regional, national, and sub-national rules, says Bryan Comer of ICCT.

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International Council on Clean Transportation (ICCT) published a post on Friday (7 July) on the International Maritime Organization (IMO) adopting the newly revised GHG reduction strategy for global shipping at MPEC 80 and its impact to the industry and the Paris Agreement:

By: Bryan Comer, Ph.D. and Francielle Carvalho, Ph.D.

In the first scheduled revision of the International Maritime Organization’s (IMO’s) greenhouse gas (GHG) strategy, member states just agreed to (1) reach net-zero GHG emissions by or around 2050 and (2) “indicative checkpoints” that call for reducing total GHG emissions by 20% and striving for 30% by 2030 and 70% and striving for 80% by 2040, both relative to 2008. This is a big improvement on the IMO’s initial GHG strategy, set in 2018, which aimed to cut GHG emissions by only 50% by 2050 and contained no absolute emissions reduction targets for the intervening years.

The initial strategy wasn’t compatible with the Paris Agreement’s aim to limit global warming to well below 2°C and pursuing efforts to limit it to 1.5°C. By our new estimates of the revised strategy, international shipping will exceed its current share of the world’s 1.5°C carbon budget by approximately 2032 but will not exceed the well below 2°C carbon budget (“well below” interpreted as 1.7°C) if it follows the emissions reduction pathway implied by this revised strategy.

The revised strategy’s “zero date” of by or around 2050 and its focus on life-cycle emissions are both key improvements. The latter are measured in terms of CO2e100, which refers to carbon dioxide equivalent emissions based on the 100-year global warming potentials of carbon dioxide, methane, and nitrous oxide. This blog post explained why it’s important that the IMO’s strategy include a year by which life-cycle, well-to-wake (WTW) GHG emissions would fall to zero and that it be not later than 2050.

In that same blog post, we estimated that the sector could only emit 10 gigatonnes (Gt) of cumulative tank-to-wake (TTW) CO2 from 2020 onward to align with 1.5°C. To keep well below 2°C (also interpreted as 1.7°C), the budget increased to 17 Gt TTW CO2. Because the IMO’s revised GHG strategy focuses on life-cycle emissions, let’s explore how much WTW CO2e100 is now available in the budget.

Based on the emission factors in this study and the international shipping fuel mix from the Fourth IMO GHG Study, we estimate that the ratio of WTW CO2e100 to TTW CO2 for international shipping is currently 1.21 to 1. This implies that the sector’s carbon budget is approximately 12 Gt WTW CO2e100 for 1.5°C and 21 Gt for well below 2°C. These are associated with a 67% probability of limiting global temperature rise to these levels. Using the same ratio and emissions data and projections from the Fourth IMO GHG Study, we estimate that international shipping currently emits about 1.1 Gt of WTW CO2e100 annually and that’s growing by about 1.3% on average each year. That places the sector on a track to exceed the 1.5°C budget by 2030 and the well below 2°C budget by 2037. With the emissions reductions expected under the initial GHG strategy, the 1.5°C budget is not exceeded until 1 year later, by 2031, and the 2°C budget is expended by 2041.

How do things change with the revised strategy? The first chart below compares a straight-line emissions trajectory that satisfies the emissions reduction targets in the revised (2023) GHG strategy with the pathway implied by the initial GHG strategy. The second chart shows the cumulative WTW CO2e100 emissions between 2020 and 2050 compared with the 1.5°C and well below 2°C carbon budgets. As you can see, the revised strategy is not compatible with 1.5°C but is compatible with well below 2°C. Had member states agreed to achieve zero emissions by 2040, the strategy would have been aligned with 1.5°C. Under the revised (2023) strategy, we’re set to exceed the 1.5°C budget by approximately 2032 under either the 20% or 30% (striving) target; however, if shipping can get to zero WTW CO2e emissions by 2050 along this pathway, it will not exceed its well below 2°C budget. Following the “striving” trajectory results in 17.1 Gt of cumulative WTW CO2e emissions, less than the 19.2 Gt under the less ambitious 2023 targets, and that improves the probability of keeping well below 2°C.

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While this revised strategy is not legally binding, the measures used to implement it can be. After the initial GHG strategy, the IMO agreed on “short-term measures” to regulate GHG emissions from ships. Two of these entered into force in 2023: the Energy Efficiency Existing Ship Index (EEXI) and the Carbon Intensity Indicator (CII). These measures are legally binding because they are incorporated into an international treaty, the International Convention for the Prevention of Pollution from Ships (MARPOL, for short). Unfortunately, we don’t expect their current iterations to meaningfully drive down emissions. 

The EEXI is not stringent enough—it’s expected to avoid about 1% of future emissions by 2030—and the CII merely grades ships from A to E. Luckily, though, both measures are set to be revised by no later than January 1, 2026. Changing these to be more effective can include regulating CO2e emissions, not just CO2, covering WTW emissions under CII, and increasing their required emissions reductions.

For the CII, there’s more that can be done. Each ship’s CII score could be published so the market can reward or punish ships that overperform or underperform. Plus, there could be consequences for ships that consistently score D or E. Right now, ships that receive a D for three consecutive years or an E in any year are required to draft and implement a plan of corrective actions. However, there are no requirements for what must be included in these plans, and there is never a time when a ship’s environmental certificates are revoked, no matter how many times the ship fails.

Beyond the short-term measures there are also mid-term measures being developed at the IMO that could enter into force as soon as 2027. The “basket of measures,” as IMO delegates are calling it, will include a technical element and an economic element. The technical element is expected to be a GHG fuel standard (GFS) that will gradually reduce the allowable WTW CO2e intensity of marine fuels. The economic element is less-well-defined; there are several things being considered, including a GHG fuel levy, a feebate program, and a cap-and-trade scheme. With regard to the GFS, we presented work based on ICCT’s Polaris energy use and emissions projection model at an IMO expert workshop and it showed that aligning with 1.5°C would require a 38% reduction in the WTW GHG intensity of marine fuels by 2030, 97% by 2040, and 100% by 2050.

Finally, countries and regions can also set their own requirements for ships that call on their ports. The European Union did this under FuelEU Maritime, which is similar to the proposed IMO GFS, and by incorporating shipping into its Emissions Trading System. Success in decarbonizing shipping will likely require international rules complemented by more ambitious regional, national, and sub-national rules. As governments develop and amend laws and regulations to enable a timely transition in the sector, the ICCT will provide technical advice and analysis to support policies that effectively reduce WTW CO2e emissions from global shipping. And we’ll be in the room when the IMO revises its GHG strategy again in 2028.

Related: IMO: ​Revised GHG reduction strategy for global shipping adopted
Related: IBIA: Historic day as IMO adopts revised GHG Strategy

 

Photo credit: International Maritime Organization
Published: 11 July, 2023

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Alternative Fuels

SMW 2024: Yinson GreenTech partners with EPS on electric vessel trials

YGT’s marine electrification business, marinEV, and EPS will perform trials involving the first cargo delivery with an electric vessel and the first crew transfer with an electric vessel in Singapore.

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SMW 2024: Yinson GreenTech and EPS forge alliance on electric vessel trials

Yinson GreenTech (YGT), a leading green technology solutions provider, has signed a Letter of Intent (LOI) with Eastern Pacific Shipping (EPS), a global leader in maritime transportation, during Singapore Maritime Week 2024, both parties said in a joint statement on Thursday (18 April). 

This collaboration, spearheaded by YGT’s marine electrification business, marinEV, marks a significant step towards cleaner and more sustainable maritime operations in Singapore, with the following key milestones on the horizon:

Electric vessel deployments

  • First cargo delivery with an electric vessel in the Port of Singapore: marinEV and EPS aim to be at the forefront of maritime history by jointly facilitating the first cargo delivery using an electric vessel within the Port of Singapore. This aligns with both companies’ commitment to environmental responsibility and demonstrates their dedication to creating a net zero world.
  • First crew transfer with an electric vessel in Singapore: Recognising the critical role of crew transfers in maritime operations, marinEV and EPS will collaborate on the first crew transfer conducted by an electric vessel in Singapore. This trial will provide valuable data on the feasibility, efficiency, and safety of electric vessels for crew transportation, paving the way for wider industry adoption.

SMW 2024: Yinson GreenTech and EPS forge alliance on electric vessel trials

The Hydromover and Lake Herman

Building upon their commitment to sustainability, marinEV will enter into a collaborative agreement with EPS. This partnership aims to integrate electric vessels into last-mile delivery operations, significantly reducing Scope 3 emissions and contributing to a cleaner shipping industry. By jointly defining ambitious emission reduction goals, marinEV and EPS will work together to create a more sustainable future for maritime transportation.

“At Yinson GreenTech, we believe that collaboration is key to unlocking a cleaner future for our oceans. Our partnership with Eastern Pacific Shipping on these groundbreaking electric vessel deployments in Singapore signifies a major leap forward,” said Jan-Viggo Johansen, Managing Director of marinEV. 

“Together, we are not only making history but also paving the way for a future where clean and efficient transportation solutions become the norm. This is an exciting moment for us, and we are committed to working closely with EPS, our existing partners and other industry leaders to achieve a truly sustainable maritime landscape.

“It is heartening to see like-minded partners in the industry adopt the ‘act now’ approach like us, taking action and exploring innovative solutions on all fronts,” said Cyril Ducau, Chief Executive Officer of EPS.

“This collaboration with Yinson GreenTech not only offers a greener transportation alternative, it also builds on the industry’s collective commitment to accelerate the decarbonisation of shipping. We don’t do things because they are easy. We do it because they are difficult so that we leave no stones unturned in our efforts to decarbonise.”

Related: Yinson GreenTech all-electric crew transfer vessel to undergo sea trials in Singapore

 

Photo credit: Maritime and Port Authority of Singapore
Published: 19 April 2024

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Bunker Fuel

SMW 2024: Maritime International Advisory Panel discusses decarbonisation, green financing, digitalisation

Panel noted that financial institutions were willing to provide lending for suitable projects to support maritime decarbonisation with sufficient assurance that the default risks were managed.

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SMW 2024: Maritime International Advisory Panel discusses decarbonisation, green financing, digitalisation

The Maritime International Advisory Panel (IAP) held its third annual meeting on 16 April 2024, during the Singapore Maritime Week 2024. 

This year, the Maritime IAP held in-depth discussions on the key developments in the maritime sector, including decarbonisation, green financing, digitalisation and cybersecurity. 

Members of the panel who were present included Hiroaki Sakashita, President and CEO, ClassNK, Stephen Fewster, Managing Director, Global Head, Shipping Finance, ING Bank, Nick Brown, CEO, Lloyd’s Register, and Jonathan Wright, Global Managing Partner, Global Finance and Supply Chain Transformation Service Line Leader, IBM.

Established in 2022 by the Ministry of Transport (MOT) and the Maritime and Port Authority of Singapore (MPA), the Maritime IAP aims to seek international perspectives on key long-term trends and developments that will shape the maritime industry. 

It comprises global leaders from the maritime sector, adjacent industries and academia, and is chaired by Mr Chee Hong Tat, Minister for Transport and Second Minister for Finance. Local industry and union leaders also joined the meeting to share their perspectives.

IAP comprises global leaders from the maritime sector, adjacent industries and academia, and is chaired by Mr Chee Hong Tat, Minister for Transport and Second Minister for Finance.

IAP comprises global leaders from the maritime sector, adjacent industries and academia, and is chaired by Mr Chee Hong Tat, Minister for Transport and Second Minister for Finance.

Key Trends and Opportunities for the Maritime Sector

The Maritime IAP highlighted that despite geopolitical uncertainties and supply chain shifts, there were significant opportunities for the global maritime sector in the following areas:

  • Accelerating the green transition towards a low- and zero-carbon future, supported by important enablers such as financing for green shipping;
  • Deepening the utilisation of technology and digitalisation while strengthening cyber resilience; and
  • Training and re-skilling the maritime workforce to take on the new job opportunities of the future.

The Maritime IAP emphasised that Singapore plays an important role in facilitating global trade flows, supporting global maritime decarbonisation, and advancing maritime digitalisation and cyber-resilience. 

Singapore’s position as a trusted and established maritime eco-system could catalyse green financing solutions, unlock the benefits of deeper utilisation of technology and data, and position it as a training hub to develop the skills needed by the future maritime workforce.

Strengthening Maritime Ecosystem Amid Global Shifts and Green Transition

Against the backdrop of global uncertainties, the Maritime IAP highlighted that Singapore could be an important trade and maritime intermediary, given its status as a neutral, trusted, and leading maritime hub. With growing trade to emerging regions as trade flows shifted, the panel believed Singapore would be an important conduit for new trades going forward. The panel further suggested for Singapore to become a trusted maritime technology hub for the development, installation, and accreditation of critical technologies, especially for those fitted onboard ships.

The Maritime IAP noted that amidst the ongoing green transition, there would be competing demands for various low- or zero-carbon fuels (e.g. hydrogen, ammonia, methanol) from other sectors.

The Maritime IAP highlighted the need to draw on a wide range of green financing instruments and investments to catalyse change, address hurdles and accelerate the sector’s green transition. 

The panel also noted that financial institutions were willing to provide lending for suitable projects to support maritime decarbonisation with sufficient assurance that the default risks were managed. To address the financing needs of the sector, the panel suggested for maritime stakeholders to pool their needs, while demand aggregation would help smaller companies gain better access to suitable solutions and financing, and also allow financial institutions to better determine and manage the risks involved.

 

Photo credit: Maritime and Port Authority of Singapore
Published: 19 April 2024

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LNG Bunkering

GLBP submits permit applications to build and operate Galveston LNG bunker terminal

Small scale natural gas liquefaction facility will be the region’s first dedicated LNG bunker terminal to provide clean LNG as bunker fuel.

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Galveston LNG Bunker Port

Galveston LNG Bunker Port (GLBP) recently announced that it filed applications with the United States Army Corps of Engineers (USACE) seeking authorization to site, construct and operate the proposed GLBP small scale natural gas liquefaction facility on Shoal Point in Texas City, Texas, in the heart of the Galveston Bay/Greater Houston port complex. 

The GLBP project will be the region’s first dedicated LNG bunker terminal to provide clean LNG as marine fuel.

Galveston LNG Bunker Port has filed key regulatory applications with relevant government agencies, including the US Army Corps of Engineers (USACE) for the Clean Water Act and Rivers & Harbors Act, Texas Railroad Commission (TRRC) for the Texas Clean Water Act (CWA) Section 401 Water Quality Certification, and United States Coast Guard (USCG) for Waterway Suitability Assessment (WSA).

The USACE application for the proposed project includes two natural gas liquefaction trains capable of producing approximately 600,000 gallons per day of LNG; two 3-million-gallon full containment LNG storage tanks; natural gas liquids and refrigerant storage; feed gas pre-treatment facilities; a bunker vessel loading berth and associated marine and loading facilities.

“The Galveston LNG Bunker Port project continues to meet its milestones, and we are very excited to announce that the necessary permitting applications have been submitted,” said Shaun Davison, Chief Development Officer of Pilot LNG. 

“We are confident that we will meet the rigorous requirements of State & Local permitting authorities to ensure that the project is delivered on-time and will meet the ever-growing demand for clean fuel supply in the Galveston Bay, and US Gulf Coast region by the end of 2026.”

Pilot LNG and Seapath Group signed a project development agreement in September of 2023 that provides a framework for the development, technical design, permitting and marketing of the proposed liquefaction project, which is estimated to come online in late 2026. 

The global maritime industry is increasingly adopting LNG as a marine fuel to significantly reduce emissions and meet tightening regulations, including IMO 2020, which came into effect January 1st, 2020.

Joshua Lubarsky, President of Seapath Group, said: “Our experience in developing, building and operating energy infrastructure will help us with this much-needed facility.” Lubarsky continues “This facility is a critical investment into the resilience of the United States’ maritime infrastructure, and upon construction will immediately provide positive environmental and economic impacts in Texas City, Galveston Bay, and the US Gulf Coast.”

Ongoing development of the project is subject to a number of risks and uncertainties. The final investment decision to proceed with construction is contingent upon completing required commercial agreements, acquiring all necessary permits and approvals, and securing financing commitments.

Related: Galveston LNG Bunker Port secures site in Texas for proposed LNG bunkering facility
Related: Seapath, Pilot LNG launch JV to develop dedicated LNG bunkering facility in US Gulf Coast
Related: Houston: Pilot LNG announces regulatory filing for Galveston LNG Bunker Port
Related: Pilot LNG submits documentation to USCG for proposed LNG Bunker Port at Galveston

Related: Pilot LNG awards Galveston LNG Bunker Port FEED contract to Wison Offshore & Marine

 

Photo credit: Galveston LNG Bunker Port
Published: 19 April 2024

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