WHEN the final moment came, it felt like a bit of an anti-climax. Bleary-eyed delegates who had worked until 1am the night before seemed to have little energy left to react to the result.

There was relief when the vote came in at 63-16 in favour of what could be the world’s first globally binding carbon price on any industry.

There was dismay at both ends of the climate divide. Mostly, though, there was the nervous energy of hundreds of people mulling the vast amount of work they now have to do to find out what this all means.

The numbers came in where many thought they would, at the lower end of the scale. They are expected to cut shipping emissions by just 10% by 2030, against an IMO target of 20%-30% set only two years ago. Biofuels receive a big boost, and clever schemes to bank and trade carbon credits will proliferate.

Tristan Smith, of the UCL Energy Institute, said the agreement ‘sets a clear limit on the viability of LNG as a marine fuel solution’, with basic penalty fees within the next few years which ramp up rapidly from 2033.

‘It is not looking like a competitive choice for newbuildings,’ he said, in comments I will have to spend a lot of time unpacking in the coming months. The scheme will not allow mid-band credit trading, making its revenue-raising function a bit more stable, but compliance a bit harder.

The market signal this Net Zero Framework will send to start a green fuels industry is mixed and many doubt it is strong enough. Countries with strong industrial policy such as China will be likely winners when it comes to market share. Rich-world countries with lower borrowing costs will get the brunt of zero or near-zero carbon fuel investments, just as they were probably always going to.

Much of the detail has been left to guidelines the IMO has yet to agree. The  could revise the numbers down, ruining the green investment case, though work is being done to stop this.

The measures will probably enter into force in 2028 and much could change by then.

But this is a momentous achievement, and anyone who has glimpsed the IMO’s work will agree on that.

Like most big moments in history, the significance will only be clear much later.

Declan Bush,
Senior reporter, Lloyd’s List

Click here to view the latest Lloyd’s List Daily Briefing