Radical Proposals to Decarbonize Shipping Industry Presented at IMO Meeting

The European Union approves the world's first law on environmentally friendly marine fuels
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Precious Shipping Managing Director, Khalid Hashim, has presented three radical proposals to the International Maritime Organisation (IMO) via video link. The proposals include a carbon tax, a ban on the construction of fuel oil-powered ships, and mandatory ship scrapping over a 20-year period. Hashim has suggested that the funds collected could be used for research and development into alternative fuels and subsidising the costs of first-party suppliers. This would encourage shipyards to build more zero-emission vessels, requiring 5,000 such new builds per year to reach the zero-emissions target by 2050.

Regarding the carbon tax, Hashim says the IMO should impose a tax of $100 per tonne of CO2 emitted starting from January 1, 2024, rising to $200 per year from 2030. This proposal would see the cost of marine engines that burn fuel oil increase by $320 per year from January 1, 2024, and $640 per hour from 2030. The aim of the carbon tax is to allocate “massive resources” solely to decarbonising shipping. In doing so, such a universal tax would stop similar taxes from other tax authorities.

Hashim’s second proposal suggests a strict ban on building ships that burn fuel oil, effectively forcing shipyards to produce zero-emission vessels. This would bring clarity to owners, shipyards, charterers and consumers, attaching tough deadlines. Shipping economist, Martin Stopford, predicts that replacing fuel-powered vessels with zero-emission vessels would cost between $1-$1.5 trillion in a good-case scenario and between $2-$3 trillion in a bad-case scenario.

The third proposal refers to an IMO deadline of 2035 for scrapping all ships older than 20 years. The proposal would reduce the number of supply ships and force customers to pay for more shipping services; it would also help to cover the multi-trillion-dollar cost of replacing the fuel-oil-burning fleet and accelerate regulations on alternative fuels.

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