“International shipping” means just that—it describes a business where voyages will take vessels across oceans, through canals, and into ports on multiple continents.
The fragmented business—with numerous vessel types, cargo matrices and charter term structures, where each piece of this big jigsaw puzzle fits neatly together with a multitude of others, is now focused on reducing and ultimately eliminating greenhouse gas emissions, the process of “decarbonisation”.
Recently, there have been a number of specific proposals for imposing a carbon tax on international shipping. In each of the plans, administration would be carried out by the International Maritime Organization (IMO), the arm of the United Nations which promulgates rules all across international shipping. Very importantly, the IMO is seeking to spearhead a massive program of research and development of alternative fuels that would reduce shipping’s carbon footprint.
The view of the international shipping marketplace as being full of interconnections among cargo, vessel and regional geographic sectors, underlies the strong objections of the Liberian International Ship & Corporate Register (LISCR), to an emissions trading scheme (ETS) for shipping proposed last year by the European Union (EU). Under the EU’s proposition, its existing carbon trading market would be expanded to international vessel journeys that originate or terminate in EU ports in addition to intra‐EU voyages.
LISCR sees the EU’s proposal as having the impact of expanding reporting requirements (monitoring, reporting, verification, or “MRV”) and the taxation on trading of emissions, well beyond the EU borders. Alfonso Castillero, LISCR’s chief operating officer, cautioned against a patchwork of regional ETS, which would create “…a fractured system of regional requirements that reach beyond their own waters…”
His view is that an ETS for shipping ought to be worldwide, and administered under the auspices of the IMO and tied to the International Convention for Prevention of Pollution from Ships (MARPOL), an international treaty dealing with shipping’s emissions.
“If the EU were to apply its Emissions Trading Scheme to shipping, using the same geographic scope as the EU’s existing MRV regulation, the effect would be to apply a financial charge on voyages that, in some cases, stretch halfway around the world,” Castillero said.
Emphasizing shipping’s bigger worldwide canvas, he added: “It is vital that we work towards one set of requirements established by the International Maritime Organization, assuring a unified global effort to confront this important issue.”
It is vital that we work towards one set of requirements established by the International Maritime Organization, assuring a unified global effort to confront this important issue.
Besides concerns about lack of uniformity, LISCR also worries about disparities between “haves” and “have nots”. It notes that if cargoes being trans‐shipped through EU maritime hubs were subject to taxation, the impact could be disproportionate on developing countries with obvious deleterious impacts on nations such as Liberia.
There are multiple solutions emerging for reducing shipping’s greenhouse gas trail and LISCR—with more than 4,800 vessels in its flag—is supporting its owners’ implementation efforts across a range of fuels, new technologies, and other innovative solutions. LNG, considered a transitional fuel, has seen uptake in larger vessels, including a number registered under the Liberian flag (the Liberian fleet has the largest number of dual-fuel vessels on the water of any flag State); such ships tend to traverse fixed routes.
But other solutions are gaining traction as well. The business has seen has seen implementation and increased analysis for the use of methanol, ammonia and, now hydrogen‐based fuels. But these solutions are mainly at nascent stages. Financially, the bottom line for shipowners around the world and the entire fuel supply chain—across multiple continents, where infrastructures will need to be built out—is that newer fuels will cost much more than their traditional counterparts. Faced with this reality, the carbon tax—which might be an actual dollar-per-ton levy, or a market-based payment depending on the vessel’s carbon intensity‐or maybe a little of both, will fund shipping’s decarbonisation trajectory.
Benson Peretti, LISCR’s executive vice president, global services (based at LISCR’s main office in Dulles, Virginia— outside Washington, DC) said: “LISCR is here to assist and support whatever decisions that owners take. Each owner has to assess a myriad of factors including their fleet compositions, the trading patterns and primary areas of operations, along with the crew’s capabilities, among many other considerations."
"I don’t think the issue of training can be stressed enough," Peretti continues, "With these new fuels and new technologies will come a requirement to ensure that the ships crews are properly trained and qualified to operate these new engines using these new fuels. This is not a case where one size fits all, and we are doing what we can to not only support the industries move toward finding these new technologies, but that they can also be safely implemented aboard.”
This is not a case where one size fits all, and we are doing what we can to not only support the industries move toward finding these new technologies, but that they can also be safely implemented aboard.
The Liberian Registry continues to work closely with the IMO, international organisations, and shipowners to find practical solutions to the multiple issues facing the industry in the joint pursuit towards zero emissions for international shipping.
With environmental matters coming to the fore, owners’ ability to have their voices heard on matters related to marine fuels—their emerging technologies and how to fund them, but also their human and crew‐related training and safety aspects—will be more vital than ever before.
LISCR’s dedication to supporting its shipowners (with 4,800+ vessels, totaling more than 200 million grt) across all facets of their businesses is stronger than ever. This commitment includes supporting its vessel owners as they navigate the voyage towards reduced greenhouse gas emissions, leading—ultimately—to a zero-emissions wake.