Letter from major Greek shipowners: What Angelikousis, Marinakis, Economou, Prokopiou, Livanos are asking about NZF

A group of leading shipping companies, including major Greek interests, are calling in a joint statement for changes to a United Nations agreement expected to be adopted in October and aimed at reducing ship fuel emissions, Reuters reports.

Global shipping is responsible for almost 3% of global carbon emissions, and the proposed agreement is critical to accelerating decarbonization through a broader regulatory framework.

The group of shipping companies that expressed "serious concerns" about the so-called Net-Zero Framework proposed for approval next month by the United Nations' International Maritime Organization (IMO) environmental committee includes tycoon John Fredriksen's Frontline, Saudi Bahri, Evangelos Marinakis ' Capital Group, shipowner George Economou 's TMS Group, Maria Angelicoussis Group, Dimitris Prokopiou 's Centrofin, George Prokopiou 's Dynacom and Dynagas , Peter Livanou's Gasolg , as well as Marine Trust, Trust Bulkers, Common Progress, Emarat Maritime, Hanwha Shipping, Seapeak and Stolt Tankers.

“In its current form, we do not believe that the IMO NZF will effectively serve the decarbonization of the shipping industry ... nor will it ensure a level playing field as it should ,” the companies said in a joint statement to Reuters on Thursday.

“We believe that critical amendments are required to the IMO NZF, including consideration of a realistic path forward … before its adoption can be considered.”

In April, countries agreed on a draft that would impose a fee on ships that violate global carbon emissions standards.

In September, the United States informed several countries that they must reject the deal or face tariffs, visa restrictions and port fees, according to sources who spoke to Reuters.

The joint statement said it was essential that any agreement avoid "excessive financial burdens and inflationary impact on the final consumer."

IMO Secretary-General Arsenio Dominguez said he was confident the agreement would be approved next month.

"I conclude this from the course of the organization so far, from the cooperation that we all have, the understanding that we still have certain challenges and concerns that we need to address," he said at the Capital Link shipping conference in London on Tuesday.

The letter in detail

As international shipping companies, representing more than 1,200 ships with a total carrying capacity of 150 million DWT, we consider it crucial to express our serious concern about the IMO Net Zero Framework (NZF), as it has been defined to date. The aim of the joint statement is to ensure that the concerns of the industry are heard and assessed by the relevant decision-makers.

Collectively, we have made significant financial investments to improve the efficiency and reduce the carbon footprint of our existing fleets, as well as through orders for state-of-the-art vessels.

It is crucial to provide the right incentives to continue in the same direction, while ensuring safe, reliable and competitive ship management. Recognizing the need for a global framework for the shipping industry, we would like to highlight that the current content of the IMO NZF lacks a comprehensive impact assessment study and, most importantly, lacks transitional checkpoints for the availability of new fuels, similar to those that existed in previous fuel switching regulations, such as the IMO 2020 regulation. In its current form, we believe that the IMO NZF will not effectively contribute to the decarbonization of the shipping industry, in line with the “IMO 2023” strategy, nor will it ensure a level playing field as envisaged in the design.This is a serious cause for concern.

Specifically, we highlight the following:

• The proposed fuel intensity limits are characterised by an excessively immediate and abrupt reduction, imposing targets equivalent to the current European FuelEU framework at least a decade earlier. Given the time required to adapt global infrastructure and supply chains, as well as for the shipping industry to design, test, build, upgrade and deliver new compliant ships, it must be noted that the current framework cannot accommodate this transition.

On the contrary, it imposes a sharp turn and rewards the exclusive use of technologies that have not been fully developed, nor have they been adequately assessed for safety.

• The sharp reduction in thresholds and the limited reward criteria incorporated into the IMO NZF do not incorporate the existence of a realistic and sustainable transition period, thus reducing incentives for investments in existing and feasible transition solutions with zero or nearly zero (ZNZ) emissions.

• The mechanism for exploiting and utilizing the resources that will be collected by the IMO NZF is unclear, especially with regard to providing incentives to shipping companies to invest in readily available alternative fuels as well as in upgrading the energy efficiency of ships.

• The business model for investing in available transition fuels, such as biofuels and LNG, is being neglected. Reducing incentives for investment in the LNG value chain eliminates one of the future pathways to achieving the zero-carbon goal, through bio- and synthetic methane/LNG.

• Failure to incentivize investment in applied and available transition technologies with established standards and specifications, and focusing only on unproven ZNZ solutions will result in the majority of shipping moving towards a “pay to transmit” management model. This will disproportionately burden small and medium-sized enterprises (SMEs), especially those operating tramp vessels.

• Today, shipping consumes 3% of the world’s energy, based on widely available fuels. According to IMO NZF, the shipping sector alone will need more than 50 mtpa of low-carbon hydrogen to meet targets by 2040, which is equivalent to around 50% of the expected global capacity to serve all industries.

• Overall, the IMO NZF will raise $20-30 billion per year by 2030 and could exceed $300 billion by 2035, if the global fleet falls short of targets by just 10%. It is essential that the IMO NZF implements appropriate greenhouse gas measures, encouraging available green transition options and providing the right signals to the market to decarbonise the shipping sector, avoiding excessive financial burdens and thus inflationary pressures on the end consumer. These fundamental issues cannot be resolved after the adoption of measures, and through guidelines. We believe that critical amendments are required to the IMO NZF, including consideration of realistic target setting and limits, rewarding outperformance, supporting the transition of SMEs, with transparency in the governance of the fund, before its adoption.

The shipping companies signing the joint statement: Bahri, Capital Group: (Capital Clean Energy Carriers, Capital Gas Ship Management, Capital Containers Ship Management, Capital Ship Management), TMS Group, Centrofin, Marine Trust, Trust Bulkers, Common Progress, Dynacom, Dynagas, Emarat Maritime, Frontline, Gaslog, Hanwha Shipping, Angelicoussis Group: (Maran Dry Maran Gas Maran Shuttle Tankers Maran Tankers), Seapeak, Stolt Tankers.

source: mononews.gr