Shipping historians covering the International Maritime Organisation (IMO) would need to go back more than 40 years to a comparable setback to what played out on Friday and the downing of the Net-Zero Framework (NZF).
Friday saw member states vote for a one-year delay in the NZF, throwing shipping’s path towards decarbonisation into considerable doubt. 57 states backed the delay, 49 opposed it, and 21 countries decided to abstain. The entrenched split in countries’ positions suggests there is potential for greater regional fragmentation of shipping emissions regulations, adding to complexity and uncertainty for the shipping industry – and maybe a saving grace for conventional ship engines.
Back in 1984, the diplomatic conference on the draft International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea (HNS Convention) failed to adopt the legislation, and a revised draft convention did not emerge until a diplomatic conference 10 years later, with the convention finally entering into force in 1996.
We expect many to shift their dual-fuel capable newbuildings to dual-fuel ready
This is just one example of how any form of delay at this United Nations body can stretch for more than a decade.
One potential upshot from last week’s indecision, according to analysts at Jefferies, an investment bank, could be a shift back to conventional fuel engines for new vessel orders and for many of those currently in the orderbook.
“We expect many to shift their dual-fuel ‘capable’ newbuildings to dual-fuel ‘ready’ to lower capex, especially for 2027 and onward deliveries (when engine changes can still be made). If there is one benefit to the IMO’s stalled initiatives, it is that shipping costs may be coming down,” Jefferies mooted in a note to clients.
Dr Martin Kröger, the CEO of the German Shipowners’ Association, writing on LinkedIn, argued that the failure of the recent Marine Environment Protection Committee session was not a failure of ambition by the shipping industry. Kröger described it as the result of “politics overpowering pragmatism”.
“On one side, the EU’s regional approach continues to undermine the global system it claims to support. On the other, the United States and Saudi Arabia, driven by their short-term energy and petro-economic interests, have blocked progress towards a credible global framework,” a clearly exasperated Kröger explained.
Patrick Verhoeven, managing director of the International Association of Ports and Harbours, commented: “We don’t know what this adjournment will lead to, but we fear it will simply open the door for more national and regional measures, which will add to an already complex regulatory patchwork resulting in unintended consequences.”
The World Shipping Council, liner shipping’s lobby group, said the IMO should use the additional year to close remaining gaps and ensure an effective global agreement
“Global regulation is essential to ensure a level playing field at the international level and to deliver the energy transition of international shipping. We will continue to work with our international partners to ensure an agreement on the IMO NZF can be reached”, said Sotiris Raptis, secretary-general of European Shipowners, the continent’s owning association.
Dr Alison Shaw, IMO manager at Transport&Environment, an NGO, said the delay leaves the shipping sector “drifting in uncertainty”.
“The world cannot let intimidation and vested interests dictate the pace of climate action. Climate-ambitious countries must use this moment to build a strong majority in support of meaningful decarbonisation. They will be the ones that benefit from the economy of tomorrow, not the geopolitical power games of the past,” Shaw argued.
A statement from the Sustainable Shipping Initiative (SSI) suggested Friday’s vote highlights some of the vulnerabilities of the IMO, the growing politicisation of decision-making and fragmented consensus between regions.
“We anticipate wider impacts from how national administrations respond, the evolution of regional regulations and the signals this sends out to the financial markets who are looking for long-term clarity,” SSI warned.
In his closing remarks on Friday, a visibly shocked Arsenio Dominguez, the IMO’s secretary-general, told delegates: “My plea to you is not to repeat the way we have negotiated this week, does not happen again. It does not help yourselves, and it does not help the organisation.”
