A powerful alliance led by China and supported by Argentina, Brazil, South Africa, and the United Arab Emirates has proposed a new market-based strategy to slash shipping emissions to the International Maritime Organization (IMO). As a mid-term approach to reduce greenhouse gas (GHG) emissions from ships, the proposal, which was filed earlier this month, seeks for an International Maritime Sustainability Funding and Reward (IMSF&R) framework. Carbon taxes, a cap-and-trade system, and the International Chamber of Shipping’s marine research fund are among the other measures being discussed by the UN’s maritime agency, none of which the five countries behind the new idea believe will work perfectly.
The backers of the mechanism claim it could incorporate almost all the goals of other candidate measures that IMO’s Marine Environment Protection Committee (MEPC) is mulling such as ambition assurance, first mover impetus, revenue raising for capacity building and impact mitigation and research and development while addressing the concerns about unaffordable fuel prices, rationing of transport supply and the potential heavy administrative burden.
The IMSF&R mechanism, which has been created by China, the world’s most important merchant shipping nation, is designed on the basis of the existing IMO Data Collecting System (DCS) and Carbon Intensity Indicator (CII) mechanism. Its basic concept is to set up the upper/lower benchmark CO2 emissions level for a ship based on its upper/lower ‘C’ rating boundaries as set out in the CII rating guidelines in conjunction with its capacity and actual distance travelled in a calendar year. Then, to collect funding contributions from ships with actual CO2 emissions above the upper benchmark level and to reward ships with CO2 emissions below the lower benchmark level.
