Small island states in the Pacific are among the world’s most vulnerable to climate change. File Image / Pixabay

• Six Pacific states describe the Net-Zero Fund as a “functional requirement” of IMO’s NZF
• At least 51% of available revenue would be reserved for just and equitable transition support under their proposal
• The plan includes funding for fleet upgrades, port infrastructure and support for states hit by higher transport costs

The IMO Net-Zero Fund is a “functional requirement” for any mid-term measure aimed at cutting greenhouse gas emissions from shipping while delivering a just and equitable transition, according to six Pacific island states.

Fiji, Kiribati, Nauru, Palau, Tuvalu and Vanuatu made the argument in a submission to the IMO last month ahead of the 22nd session of its Intersessional Working Group on greenhouse gas emissions from ships in September.

The countries said the fund is central to the IMO’s mid-term measures under the Net-Zero Framework (NZF) and should be developed alongside guidelines on GHG fuel intensity and on zero- and near-zero-emission fuels and technologies.

“The IMO Net-Zero Framework is a package that cannot function without all its necessary elements,” they said.

The group also described the fund as the “singular guarantee that the transition will not leave Member States behind”.

“Without the IMO Net-Zero Fund, developing countries, especially small islands developing States (SIDS) and least developed countries (LDCs), will be left to bear all the cost of the transition, with no guarantee of the support these countries require,” the submission said.

The proposed NZF combines a global fuel standard with a GHG pricing mechanism.

Ships exceeding set thresholds could make payments into the IMO Net-Zero Fund, which would use the revenue to reward low-emission ships and help developing countries with the transition.

51% of Fund Revenue Proposed for Just and Equitable Transition

Under the Pacific states’ proposal, no less than 51% of available revenue after administrative costs would be allocated to just and equitable transition (JET) support.

“After Administrative Costs, no less than 51% of available revenue shall be allocated to JET Support, with the remainder allocated to ZNZ Rewards,” the proposal states.

The remainder would be allocated to rewards for zero and near-zero GHG technologies, fuels and energy sources.

The proposal also calls for safeguards to prevent a disproportionate share of funding being captured by a small number of recipients or higher-capacity applicants, including minimum allocation floors for SIDS and LDCs.

The Pacific states want targeted support for domestic fleet upgrades and port infrastructure in developing countries, as well as assistance for states facing disproportionately higher transport costs from the transition.