JAPAN has added another tax-free carbon tax plan to the IMO pile.

States can now choose between adopting the Net-Zero Framework they approved a year ago, or two alternatives (the others by Liberia and Panama) which keep the paperwork, but remove the ‘economic element’, and with it any incentive for ships to actually go green.

A fourth option — kick the debate back into the long grass and keep the industry guessing — has been the IMO’s favoured tactic in the past and is a strong possibility this time too.

The US has long been clear it will oppose any carbon tax, so some countries are trying to find something they can agree on that looks like a green regulation without actually being one.

The technical-only plans wouldn’t reduce emissions but would create more uncertain compliance and fuel price risk. If one of them passes, it will be like another CII (Carbon Intensity Indicator), i.e. more pain for industry for no planetary benefit, and the same old arguments playing out at IMO every few years as part of the reviews.

A toothless IMO plan would give the EU the excuse to lock in the ETS and FuelEU schemes, and other countries the excuse to respond in kind.

Many countries, including China, are still hard at work on the design of the IMO Fund and reward schemes. That work would hardly be worth doing if they didn’t want such a scheme at all.

Brazil has argued it would be better to freeze the discussion and keep the bones of the NZF as a basis for future rules, rather than kill it outright and start from scratch.

The Liberia plan has not attracted much in the way of written support. Plans designed to lock shipping into LNG may look less attractive given the war in the Middle East and resulting gas supply shock.

Shipping is already seeing US foreign policy driving up bunker prices. For buyers of those fuels, greener alternatives could even start to look like a sensible price hedge.

It sounds crazy, but the level of support for the NZF could be higher than it looks. At MEPC84 — now only a month away, we’ll find out.

Declan Bush
Senior reporter, Lloyd’s List 

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