Analysis
ICCT: Why the IMO needs to pick a zero date and set interim targets in its revised GHG strategy
‘If emissions remain high, we’ll need to cut back even more rapidly in the future and move up the zero date to keep within our carbon budget. No one wants that,’ says spokesman.
International Council on Clean Transportation (ICCT) on Wednesday released a post written by ICCT Marine Programme Lead Bryan Comer entitled ‘Zero-Emission Shipping and the Paris agreement: Why the IMO needs to pick a zero date and set interim targets in its revised GHG strategy’:
On Friday the 13th of April 2018, I was sitting in the back of a hot plenary room at the London headquarters of the International Maritime Organization (IMO), updating ICCT’s real-time analysis of what IMO member states agreed to that day for the initial IMO greenhouse gas (GHG) strategy.
Unfortunately, we found that the strategy’s goal of cutting emissions by at least 50% from 2008 levels by 2050 wasn’t aligned with achieving the Paris Agreement temperature goals. Luckily, though, IMO member states have an opportunity to increase their ambition in the revised GHG strategy, which will be agreed to in 2023. Negotiations will start at the 77th session of the Marine Environment Protection Committee (MEPC 77) in November 2021 and I want to talk here about the two main ways in which the initial GHG strategy can be strengthened.
First, we need a zero date. We need to choose a year by which the carbon dioxide equivalent (CO2e, which includes CO2, methane, black carbon, and nitrous oxide) emissions from international shipping, measured on a life-cycle basis, are zero. Second, we need interim targets.
We need to set absolute emissions reduction goals for years between now and the zero date that get us on the path to full decarbonisation now.
Regarding the zero date, my analysis shows it should be not later than 2050. That’s based on updated carbon budgets from the Intergovernmental Panel on Climate Change’s Sixth Assessment Report. If humans pollute the atmosphere with an additional 400 gigatonnes (Gt) of CO2, it’s estimated that we have a 67% chance of keeping warming below 1.5 °C. At 700 Gt, it’s estimated there’s a 67% chance of limiting warming to 1.7 °C, which I’ll interpret here as “well below 2 °C.”
Over the last several years, international shipping has accounted for about 2.5% of anthropogenic CO2 emissions, according to the Fourth IMO Greenhouse Gas Study. This implies that shipping’s proportional share of the remaining 1.5 °C and well below 2 °C carbon budgets is about 10 Gt and 17 Gt, respectively. (Side note: I know I said we have to get CO2e emissions to zero, not just CO2, but the IPCC’s carbon budgets are based only on CO2.
If they were based on CO2e, the budgets would be larger in absolute terms, but so would the annual emissions from anthropogenic sources, and thus the time we have to decarbonise would remain roughly the same. We’ve written extensively about the climate risks associated with the other pollutants, including methane and black carbon.
Cutting these emissions can slow the rate of global warming, and that’s important for keeping below 1.5 °C or 2 °C.) International shipping currently emits more than 0.9 Gt of CO2 each year, and that’s growing. Based on the carbon budgets, I’ve figured that reaching zero by 2040 is aligned with limiting warming to 1.5 °C and zero by 2050 is aligned with a well below 2 °C future. But this only works if shipping starts reducing emissions now, and that’s where the interim targets come in.
The red line in Figure 1 shows the current emissions trajectory based on one of the business-as-usual scenarios (SSP2_RCP2.6_L) in the Fourth IMO Greenhouse Gas Study. The gray line shows the 2008 baseline emissions which, coincidentally, are nearly the same as 2018 emissions. The yellow line shows the implied straight-line emissions trajectory to achieve the 2050 absolute emissions reduction goal contained in the initial IMO GHG strategy. The light green and dark green lines show the pathways consistent with the well below 2 °C and the 1.5 °C scenario, respectively.
Figure 1. International shipping emissions pathways consistent with the Paris Agreement temperature goals require emissions to fall by one-third or one-half by 2030 and to be zero by 2040 or 2050.
What policymakers need to understand is that it’s the cumulative emissions between now and the zero year that we’re concerned with, because that’s how the carbon budgets are conceived. The yellow line, which is aligned with the IMO initial GHG strategy’s 2050 target, uses up a cumulative 21 Gt of CO2 between now and 2050.
That’s already twice the 1.5 °C-compatible budget. The zero-by-2040 trajectory results in 9.3 Gt of CO2 between now and 2040, less than the 10 Gt carbon budget necessary for a chance to keep below 1.5 °C. But this requires shipping emissions to decrease along this straight-line trajectory, including a 50% reduction in absolute emissions relative to 2008 by 2030 and zero emissions by 2040.
To keep well below 2 °C requires cutting emissions by one-third by 2030 and by two-thirds by 2040 relative to 2008.
Meeting these interim reductions is critically important. If we exactly follow the zero-by-2050 trajectory, cumulative emissions between now and 2050 would total only 14 Gt, lower than the 17 Gt well below 2 °C budget.
Alternatively, the blue dashed line in Figure 2 below shows that if we continue along the current trajectory and only start reducing emissions in 2030, we’ll need to get to zero emissions by 2044 to stay within the well below 2 °C budget. Even scarier, if we continue along the current trajectory, which accumulates 10 Gt of CO2 between 2020 and 2029, we’ll need to get to zero emissions by 2030 to stay within the 1.5 °C budget.
That’s why it’s so important start reducing emissions as quickly as possible. If emissions remain high, we’ll need to cut back even more rapidly in the future and move up the zero date to keep within our carbon budget. No one wants that.
Figure 2. Delaying action to 2030 requires international shipping emissions to fall to zero by 2044 to be aligned with well below 2 °C. That’s 6 years earlier than if we start cutting emissions now.
So, while there’s some nuance, if international shipping is to do its part to achieve the Paris Agreement temperature goals, member states should agree to reduce absolute emissions by 33% or 50% by 2030 and 67% or 100% in 2040 relative to 2008. No matter what, the IMO’s revised GHG strategy should aim for zero emissions by no later than 2050.
The 2030 target is probably the most important. Anyone can say what they’ll do in 20 or 30 years’ time, but what are we prepared to do this decade? How do we show that we’re serious about decarbonizing shipping? I’d say it’s the interim targets and the zero date, paired with effective and enforceable regulations, that would show we mean business.
I hope that when the IMO agrees to its revised GHG strategy in 2023 I’ll be back in London, sitting in the back of that hot plenary room, getting ready to report that shipping’s climate ambitions are aligned with the Paris Agreement temperature goals.
Photo credit: International Maritime Organization and ICCT
Published: 10 September, 2021
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Integr8 Fuels: Why bunker markets could be lower than we thought
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By Steve Christy, Expert Contributor, Integr8 Fuels
29 July 2026
We have just seen one false dawn, is there another to come?
Last month, we wrote about how close we were to the expected lows in Brent and Rotterdam bunker prices, but not yet Singapore. Given what has happened since, a month is not only a long time in politics, but also a very long time in the bunker market.
There was a resumption of attacks in the Arabian Gulf region on 13 July, followed by targeted Houthi attacks on Saudi Arabia’s Red Sea oil infrastructure and shipping in the Bab el-Mandeb region, the gateway between the Red Sea and the Gulf of Aden. As a result, Brent futures fell to lows of around $70/bbl in late June and early July before surging to a high of $100/bbl on 23 July. Over the same period, Singapore VLSFO fell to $635/mt before climbing to $865/mt, a swing of $230/mt in just 16 days.
Prices at the start of this week fell sharply after a halt in Arabian Gulf attacks over the weekend, with front month Brent was down to intra-day lows of $84/bbl, and Singapore VLSFO $750/mt. However, at the time of writing there has been a ‘surprise’ attack by Iran, and retaliatory action by the US, with prices rising again. It looks like we could be at another false dawn.
The obvious questions are: will there be a return to peace negotiations, and are we close to the end of the war and free-flowing traffic through the strait of Hormuz (and also the Bab el-Mandeb)? The obvious answer is, we don’t know; there are only a few people that are likely to know the answer to this. All we can do is plan for every eventuality.
Low stocks, higher bunker prices, and a strong Singapore VLSFO premium: it’s a challenge
For those of us in the bunker market, the point we made last month about Singapore VLSFO trading at a strong premium to crude still holds, albeit slightly less pronounced. The loss of supplies through the Strait of Hormuz, together with the added uncertainty surrounding Saudi product exports from the Jizan and Rabigh refineries on the Red Sea, has sustained this premium.
These developments are likely to keep the Singapore VLSFO premium to crude at elevated levels until there is greater confidence that Middle East crude and product supplies are returning to more normal trading patterns. Amid all the price volatility, this Singapore VLSFO premium remains a key indicator to watch.
Backwardation in Brent futures illustrates market psychology
One month ago, backwardation in Brent futures (front month minus second month) had fallen from $7/bbl to virtually nothing, reflecting the market’s belief that an end to the war was little more than a negotiating step away. It wasn’t. The resumption of attacks, coupled with Houthi involvement in the Red Sea, sent prices sharply higher again, with backwardation in the Brent futures market returning to almost $6/bbl.
The halt in attacks over the past weekend has taken steam out of the market, with prices and backwardation falling sharply. Where we go from here depends if there is again a belief peace is on the horizon, or if this is another false dawn. The past month highlights how impossible it is to predict an ending to the war, and how fragile any expectations of peace can be.
We cannot ignore the price, but still must look to the future
It is impossible to write a report and not highlight the turmoil of the current market and what is happening. However, we still must look beyond this, to see where we could end up.
In an earlier report, we suggested the run-up to the US mid-term elections in November may be a backstop to the war. However, even this is not guaranteed. There are many dynamic elements to the economy and voter intentions, but one feature that will always crop up in the US is the gasoline price. This has risen from $3/gallon before the war to over $4/gallon for the past four months.
If it comes to it, will Republican voters want to see a resolution to the war and a return to $3 gasoline prices ahead of the elections?
We have a change of heart on how low bunker prices can go
We don’t know exact timings, but in any planning, we must look at what happens when the war does finally end and prices fall, whenever that may be. In past reports we have highlighted the view that Brent crude prices are unlikely to fall back to pre-war levels in the $60s, and Singapore VLSFO unlikely to go back in to the $400s. This may be the point at which these views change.
Previous thinking was based on a relatively short war, where there would be a large loss of oil supply and a massive stock-draw. In this case, tighter stock levels would be sufficient to keep prices higher than their pre-war levels once we returned to ‘normality’. This would mean Brent futures in the $70s (and not in the $60s), and Singapore VLSFO in the $500s, and not the $400s.
A number of mainstream analysts also held this view, although there were some that were lower and some higher.
Given the war has already gone on for much longer than almost everyone expected, this thinking must change. Yes, global stocks have been drawn down at a rapid rate, but this is slowing. Higher pricing and inflationary blows have had a major impact on global oil demand, with current indications that total oil demand in the second quarter of this year was some 4 million b/d lower than year earlier levels.
The graph below shows this sharp drop in demand and even if the war comes to an end relatively soon, and demand gets back towards some normality, a structural loss of more than 1 million b/d in global oil demand is still expected to have taken place because of the extended period of conflict.
If the war goes on for even longer, structural losses in global oil demand are likely to be even greater.
Source: US EIA
It’s a hard road, but we can get there
This means that once the war does end, market psychology will be looking at a rapid increase in oil supplies going into a global market which is much lower in demand. This opens the way for prices to easily return to their pre-war levels of Brent in the $60s and Singapore VLSFO in the $400s.
Now we just need those at the centre of negotiations to get us there.
Photo credit and source: Integr8 Fuels
Published: 30 July, 2026
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