ICS Proposes Feebate System for Net Zero Shipping Emissions by 2050

The International Chamber of Shipping (ICS), in collaboration with the governments of Bahamas and Liberia, is advocating for a “feebate” mechanism to help achieve the International Maritime Organization’s (IMO) goal of net zero greenhouse gas (GHG) emissions from international shipping by 2050. This proposal involves implementing a GHG Fee based on the amount of CO2 equivalent emitted by ships, along with a “feebate” system to encourage the use of zero/near-zero GHG marine fuels like green ammonia, hydrogen, and methanol. The aim is to bridge the cost disparity between conventional and green fuels, with a portion of the revenue going towards the creation of an “IMO Net Zero Shipping Fund” to support GHG reduction efforts in developing countries.

The proposed GHG pricing mechanism does not specify the exact fee, but suggests an initial rate of around US$60 per tonne of conventional fuel consumed, with a reward rate of US$100 per tonne of CO2e prevented. This system would be managed through an automated IMO mechanism developed by ICS, with a portion of the revenue allocated to the feebate program directed to the Net Zero Shipping Fund. ICS Secretary General, Guy Platten, emphasizes the importance of incentivizing the production and use of green marine fuels to prevent significant GHG emissions and facilitate the transition to a more sustainable shipping industry.

Failure to implement a uniform GHG fee for all ships globally could result in fragmented, unilateral GHG charges being imposed regionally or nationally, leading to regulatory confusion and economic inefficiencies. ICS believes that a fair and consistent maritime GHG emission pricing mechanism is essential for promoting fair competition and upholding the principle of the “polluter pays.” The proposal will be presented at the upcoming IMO negotiations in September, where discussions will focus on developing new GHG reduction regulations for international shipping to be adopted by governments in 2025.

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