The International Chamber of Shipping’s (ICS) 2016 Annual Review of maritime policy developments outlines the key issues faced in 2016 and highlights the importance of industry response to the Paris Agreement.
The report released by the industry association has been released ahead of the ICS Annual General Meeting in Tokyo, 1-3 June. It draws upon the efforts ICS has, and will continue to make towards supporting the industry to reduce CO2 emissions, especially for the industry to align itself with the Paris Agreement.
The Annual Review states that sectors of the global economy need to identify when they will peak their absolute emissions as this will need to occur before emissions start to fall. However, the Paris Agreement and ICS recognise that different sectors of the global economy will need to decarbonise at different speeds and therefore because of shipping’s role in world trade, it may be one of the last industries able to decarbonise before the second half of the century.
ICS also states in its report that less developed International Maritime Organization (IMO) Member States should also not be expected to meet the same level of CO2 reduction commitments as developed economies. It is therefore vital that IMO Member States take account of this as they develop CO2 reduction commitments on behalf of international shipping.
Furthermore, in the report ICS acknowledges the concerns around the economic impacts to ship owners in light of a 2020 or 2025 0.5% global sulphur emissions cap. The decision will be highly significant because the cost of low-sulphur fuel is likely to be well over 50% more than the cost of residual fuel in 2020 if oil prices increase as predicted.
In addition, the availability of low-sulphur fuel is a concern as if oil prices do not rise then the demand may be greater than the availability. The reports states that the oil refining industry will need to ensure that sufficient quantities of compliant fuel will be available, while ship owners will need to make decisions relatively soon about whether using compliant low-sulphur fuel or switching to sulphur reducing technologies such as scrubbers or using liquefied natural gas (LNG) is more viable given the cost and potential shortage of low-sulphur fuel if demand increases.
The 2016 Annual Review can be viewed by clicking here.
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