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ECSA and ICS Focus on Fuel Supply/Cost as FuelEU Maritime is Debated

alternative fuel supply
New calls from shipping organizations to support the availability of alternative fuels

Published Feb 16, 2023 7:04 PM by The Maritime Executive

With the European Union’s governing bodies back in session this week for new negotiations on the FuelEU policies, factions within the shipping industry are again putting forward their proposals focus on the supply and cost of alternative fuels. The EU’s tripartite meetings have been ongoing on elements of the plans to tax CO2 emissions with the focus shifting today, February 16, to the maritime portions of the legislation.

In advance of the latest round of talks between the EU’s Parliament, Council, and Commission, both the European Community Shipowners’ Association (ECSA) and the International Chamber of Shipping (ICS) renewed their positions continuing to lobby for elements focusing on fuel production, cost, and supply. 

The ECSA as the umbrella organization representing the interests of 20 shipping associations in the EU and Norway says it is ready to support the FuelEU Maritime efforts conditional on the mandatory inclusion of fuel suppliers and the availability of fuels. While recognizing that shipping has a key role to play to achieve the EU’s climate objectives, the group continues to express concerns that there will be sufficient quantities of low- and zero-carbon fuels available in the market at an affordable price.

“It is key to ensure that shipowners are not unduly penalized if the sustainable fuels necessary for compliance are not delivered. This provision, together with a binding target for maritime fuel suppliers as proposed by the Parliament in RED III, is essential for the energy transition of shipping,” writes the ECSA in its latest statement of the negotiations.

The ICS reaffirmed its commitment to the 2050 net-zero goal turning once again to its call for mandatory contributions per ton of CO2 emitted to create a new IMO fund used to narrow the gap between alternative fuel and conventional fuels by rewarding first movers that adopt alternative fuels such as methanol, ammonia, and hydrogen as well as sustainable biofuels and synthetic fuels. They also want incentives for ship owners and operators that deploy new technologies including carbon capture.

“Our immediate goal is to ensure that some kind of levy-based global economic measure will be prioritized for rapid finalization by the IMO Marine Environment Protection Committee at its next meeting in July,” said Simon Bennett, Deputy Secretary General of the International Chamber of Shipping. “With political will, it can be readily adopted via the existing IMO MARPOL Convention by 2024, so that our commitment to net zero by 2050 can remain plausible given the enormous challenge of transitioning the entire global industry to new fuels and technologies in less than 30 years.”

The ISC has been advocating for its funding mechanism for the past several meetings at the IMO. The latest revision of the proposal details the fund and reward system saying it could be simple to administer and set at a relatively low level although they level the final decision to the governments. They reiterate that their proposal rewards leaders in the update as well as supporting the production of alternate fuels and reducing the risk for the introduction of the new bunkering infrastructure needed to support the transition.

“If we are to have a sustainable decarbonized future, governments need to support the shipping industry’s willingness to come forward with innovative measures that can incentivize first movers whilst also providing support to developing countries,” said Guy Platten, Secretary General of the International Chamber of Shipping. “I am pleased that the principle of a global contribution paid by shipowners into a fund is increasingly being recognized as the fairest and most effective method to create the funds and incentives required to catalyze the decarbonization of our industry.”

The ICS has suggested that total funds of about $10 billion annually could be sufficient to fund its proposal for a rewards program up until about 2030 while also providing tens of billions of dollars to support maritime GHG reduction projects in developing countries. They suggest this could be achieved with an initial contribution of about $50 per ton of marine fuel oil consumed.

The latest ICS submission provides additional information to assist members attending the IMO’s MEPC 80 meeting scheduled for July 2023. It would be part of the planned amendments to the MAPOL Annex due to be adopted by the IMOP Member states in 2024.