London – 11.09.23. In a rare occurrence in the challenging politics of climate change, the IMO’s Revised GHG Strategy, adopted at MEPC 80 in July, represents a significant leap forwards in ambition. New analysis by UMAS shows the IMO’s targets correspond to a path between 1.55oC and 1.6oC according to the GHG budget defined by the IPCC. The implications to existing and new ships and the energy industry, are for the average ship’s GHG intensity to be reduced by 86% by 2040, spelling an end to the era of fossil fuelled shipping.
Dr Tristan Smith, Reader at UCL Energy Institute, Director of UMAS said: “The IMO’s revised strategy sets the scene for the large majority of shipping to have maximised efficiency by 2030, and transitioned away from fossil fuels by 2040. The outcome creates a clear onus for national, regional and corporate actors to step-up ambition and action in order to be of assistance in ensuring a smooth transition.”
If national, regional and private actions are strengthened and more carefully dovetailed into the nature of transition the IMO’s Revised Strategy now signals, then there remains a key role to play in supporting and assisting the sector through the different transition phases.
Dr Domagoj Baresic Research Fellow at UCL said, “The shipping sector is entering a new phase along its decarbonization journey. Whilst the clarity of the shape and speed at which this transition will take place remains to be determined, it is clear that adoption of scalable zero emission fuels should now start rapidly increasing with support from corporate, national and regional actions.”
On regional action, for example, the stringency and role of EU policies (inclusion of shipping in the EU ETS, EU fuel standards), now appears of low salience to business cases, relative to what should be anticipated from global measures. EU policies also increase the inequity of the transition, increasing cost to developing country trade, whilst transferring these revenues to high income countries.
Dr Alison Shaw, Research Fellow at UCL and Policy Lead at UMAS said, ‘Policy for shipping’s transition must, at least, meet a two-pillar test of Effectiveness and Equity. With our report finding current regional regulation falling unfortunately short on both counts, we must now see a focused effort by policymakers at IMO to bring about effective and equitable mid-term measures that both the sector and the Member States need.’
In addition to increasing ambition, the window for early action and leadership from corporate and national action during the emergence phase has also been compressed. There is now only a small window of 3-4 years before IMO’s mid-term measures enter into force in 2027/2028. Early mover action through private action is crucial in this emergence phase of shipping’s transition but the analysis shows industry initiatives have suffered from a lack of ambition, transparency and reliability. The pressure to align with 1.5oC pathway is now even higher.
Dr Nishatabbas Rehmatulla, Principal research fellow at UCL and Principal Consultant at UMAS said “Much remains to be desired of industry initiatives. Our analysis shows none are aligned with the latest climate science in terms of their ambition and lack transparency. This needs to change, for example by following guidance published by the UN for private actors, or the very actors that present themselves as the vanguard face the risk of being called out for greenwashing”
Dr Jean-Marc Bonello, Principal Consultant at UMAS said “While the rise of industry-driven climate-alignment initiatives has been a positive step forward, the ambition and methodology for these initiatives has to be based on a science-based 1.5oC definition as per the UN to avoid greenwashing and obsolescence.”
The report provides a number of recommendations to stakeholders in light of the above. Corporate actors and investors should not be complacent that decisions made on the Initial Strategy are sound, understanding and factoring in the Revised Strategy targets – especially the 2030 and 2040 targets is crucial. They must apply and align with the UN’s High Level Expert Group guidance on integrity e.g. including all scopes (1-3), interim targets and disclosure, or risk becoming irrelevant. National actors should bring forward plans for national action to be particularly focused on the period from now to 2027/28, bringing forward public/private collaborations to ensure these have a chance of fulfilling their roles during this decade and establish a definition that Green Corridors must have zero or near-zero GHG operation before 2030.