The IMO needs to give a clear direction on where ‘carbon pricing’ and the use of LNG as a marine fuel sit within its decarbonisation agenda.
In its latest report, Gibson argued that ‘carbon taxes might be the only way to make future fuels more competitive’. The ship brokerage also pointed out owners’ reluctance to invest in liquefied natural gas-fueled ships because of a lack of guidance from the IMO.
Lack of progress in reopening the MBMs debate has drawn criticism during the recent IMO meetings.
THERE is increasing urgency for the International Maritime Organization to offer clarity on its medium and long-term measures to cut greenhouse gas emissions, so that owners will have confidence to invest in next-generation vessels.
One of the key issues that should be put on the agenda is the introduction of “carbon pricing” as an incentive for shipping to take on green technologies, said Gibson in a report.
The view comes amid criticism about the lack of progress and decision to defer discussions regarding market-based measures to reduce carbon emissions during the recent virtual meeting of the IMO’s Maritime Environment Protection Committee.
Zero-emission, or low-carbon fuels will not make financial sense without some form of incentive for shipping companies as hydrocarbon-based fuel products remain relatively cheap, according to the report.
“Biofuels, including bio-LNG and bio-marine gasoil, are expected to price at a significant premium to conventional fuels, while green ammonia and hydrogen will also be significantly more expensive, even if costs fall over time.
“Carbon taxes might be the only way to make future fuels more competitive,” said Gibson.
Another important issue is the use of liquified natural gas as a transitional marine fuel in the sector’s battle against climate change.
“What the industry needs right now is clarity as to where LNG sits within the IMO’s climate goals and the likely shape and form of its medium and long-term goals,” said the brokerage.
That is because it remains debatable whether the gas can effectively help reduce greenhouse gas emissions.
Gibson cited a study by the International Council on Clean Transportation as showing that there may be no climate benefits in using LNG as a shipping fuel over 20 years, during which upstream and downstream emissions are factored into the equation.
This is because methane, of which LNG mainly consists, traps 86 times more heat in the atmosphere than CO2 over the same period of time.
That said, stretching the time frame to 100 years will see a 15% reduction in the maximum life cycle GHG benefits of LNG compared with MGO, provided high pressure dual-fuel engines are used and upstream methane emissions are also controlled well.
There are studies showing more favourable results, however. A study by Thinkstep on behalf of UK-based Sea\LNG found that the use of LNG could lead to a GHG reduction of up to 21% compared with current oil-based marine fuel.
Despite retrofitting costs, LNG dual-fuel engines could use cleaner fuels such as green ammonia and hydrogen in future, while methane slip can be improved by engine manufacturers.
But emissions from natural gas extraction, liquefaction and transport are not in the hands of the shipping industry, said Gibson.
“Until the industry has more guidance, the best thing many owners can do is nothing, although this is exactly the opposite of what is needed to address climate change.”