A new Fund-and-Reward carbon emissions program is the brainchild of the International Chamber of Shipping. A fee would be charged on carbon and pay shipowners who reduce their emissions.
The program works based on the CO2 emissions that have been prevented. It would be funded via a “mandatory flat rate contribution” from ships per tonne of CO2 emitted. By 2024 the ICS hopes that this system can be up and running, assuming agreement of the Marine Environment Protection Committee (MEPC). The hopes are that the change will ensure at least five percent of the global fleet’s energy will come from alternative fuels by 2030.
The ICS Secretary General, Guy Platten, said in a statement, “We must narrow the significant price gap of new, very expensive, alternative fuels to accelerate their production and take-up, so that we reach a take-off point by 2030 …This fund has the potential to go beyond the traditional reach of the IMO, boosting investment for the fuel production and bunkering infrastructure in ports worldwide that will be vital for our global industry to decarbonise completely.”
The results of the ICS commissioned study by Clarksons on the economic impact of its new proposal suggest that a $100 charge per tonne CO2 would not have a substantial negative effect on national economies. Plus the dollar value of the mandatory flat rate contribution will be of great interest to stakeholders.
The ICS have stated that they shall start with a “much lower” carbon charge until the first five-year review in 2029. The dollar value shall also be reconsidered every five years.
The previous scheme designed by ICS was not intended as a financial incentive system, and it would have levied a charge of roughly $0.70 per tonne of CO2 ($2 per tonne of fuel) to support R&D only. The fund-and-reward program was a necessary revision to push the reduction of CO2 in the shipping industry.