BIMCO, the world’s largest shipping association, has called on states and the shipping industry to start a dialogue on how to create a global ruleset for market-based measures (MBM) to support the use of low carbon fuels and to create a level playing field for the industry.

The move comes in an effort to encourage and make easier the sector’s decarbonization.

“One way we can make the current low emission technologies competitive with traditional fuels is through some form of market-based measure,” Sadan Kaptanoglu, BIMCO president, commented.

“We need a mechanism that equalizes the cost between using low carbon fuels and traditional fossil fuels.”

BIMCO measures shipping
Image Courtesy: IMO

According to the association, market-based measures for shipping should be governed by global rules, as it is critical that the industry is not required to pay for its carbon emissions multiple times. This is relevant if market-based measures are being implemented regionally as, for example, has been announced by the European Commission.

A market-based measure can be described as a rule or legal framework that encourages a desired behaviour through financial incentives. In this case, the shipping industry should be encouraged to use low carbon or zero-carbon fuels to limit CO2 emissions. But as long as using traditional fuels is dramatically cheaper, it will discourage the uptake of low carbon fuels and put the first moving companies at a significant competitive disadvantage, BIMCO pointed out.

“Equalizing the cost can also spur on innovation, because the potential market grows, and speed up the installation of the required infrastructure,” Kaptanoglu added.

The International Maritime Organization (IMO) is a good platform for the debate on a ruleset, Kaptanoglu believes, but it is critical that the debate begins now, in order for the industry to make the transition in time to reach our CO2 reduction targets.

The support for some form of globally regulated market-based measures was debated and agreed at BIMCO’s board of directors meeting in late January 2021.

In autumn 2020, the IMO approved a number of measures aimed at cutting the shipping sector’s carbon emissions in the next decade. The measure will require new ships built from 2023 to be significantly more energy-efficient. What is more, the measures call for the introduction of carbon intensity targets to existing ships that would be calculated based on guidelines yet to be developed by the IMO, the objective being to make them mandatory by 2026.

National maritime authorities and environmental organizations around the world expressed earlier their disappointment with the measures, describing them as unambitious and vague.

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