World Shipping Council Submits Updated Green Balance Mechanism Proposal to IMO

The proposal has been submitted for the next meetings of the IMO's GHG working group and Marine Environment Protection Committee. Image Credit: Ship & Bunker

Industry body the World Shipping Council has submitted an updated version of its Green Balance Mechanism to the IMO.

The mechanism is designed to make green bunker fuels competitive on price with conventional bunkers, the WSC said in an emailed statement on Wednesday.

The proposal contains the following elements, according to the statement:

• The Green Balance Mechanism is fully integrated with a greenhouse gas fuel-intensity standard.
• The Green Balance Mechanism applies a fee on fossil fuels and then allocates the funds to green fuels so that the average cost of fuel is roughly equal.
• The fees and allocation of funds are calculated each year, based on the amount of green fuel use and market prices, balancing out the cost across very different fuels.
• The greater the greenhouse gas emission reductions a fuel delivers – on a well-to-wake lifecycle basis – the greater the financial allocation received.
• This accelerates the uptake of the greenest fuels, delivering the deepest greenhouse gas reductions. At the same time, all fuels that deliver greenhouse gas reductions above the standards established in the Green Balance Mechanism receive some allocation, proportional to their greenhouse gas emission reduction.
• The emissions reductions required for a fuel to receive an allocation would follow the IMO commitments to decarbonisation over time, starting at a reduction of 65% compared to fossil fuels and increasing in stringency to reach the 2050 net-zero goal.
• The Green Balance Mechanism includes a framework to create a parallel 'IMO Net-Zero Fund' to raise funds for Research, Development & Demonstration projects and climate mitigation initiatives, to provide a just and equitable transition.

"For shipping's energy transition to take place, green maritime fuels must be available at scale, requiring billion-dollar investments by energy producers,"Joe Kramek, CEO of the WSC, said in the statement.

"For these investments to occur, the IMO must adopt regulations that not only increase fossil fuel prices but also make green fuels a viable alternative.

"Only then will there be a strong enough market for green maritime fuels to stimulate the necessary levels of investment in green fuel production and renewable energy."

The proposal has been submitted for the next meetings of the IMO's GHG working group and Marine Environment Protection Committee.