The success of IMO’s new emission-reduction strategy hinges on a well-to-wake approach
The IMO’s planned revision of its greenhouse gas emissions reduction strategy will not enable an efficient and equitable transition to a green shipping future if it fails to include the full emissions lifecycle — the IMO must adopt a ‘well -to-wake’ approach
Writing exclusively for Lloyd’s List, a coalition of senior industry leaders argue that governments must consider the entire energy supply chain’s emissions when setting climate targets
FOR the shipping sector to contribute to the goals of the Paris Agreement, the International Maritime Organization must adopt a well-to-wake approach to fuel greenhouse gas emissions.
In 2018, the IMO adopted its initial strategy for greenhouse gas reductions, setting a target to cut the shipping industry’s emissions in half by 2050. This strategy will be revised in July and the IMO is rightfully under pressure to increase its level of ambition to better align with the Paris Agreement’s goal of limiting global warming to a 1.5°C increase.
A successful revision of the strategy will create clear and investable pathways for the industry, as well as increase the inclusivity and equitability of shipping’s green transition by opening up opportunities for investment in developing countries. A key indicator of the IMO’s ambition level will be how it approaches the emissions of various fuels. At present, the IMO’s regulations are on a tank-to-wake basis, meaning that only the emissions of direct fuel combustion and use on board a vessel are considered.
This approach to emissions does not consider the climate impacts of the entire energy supply chain. This means that a possible zero-emission target could at worst become an empty gesture for climate action, disincentivising investments in green energy and instead encouraging continued investments in fossil fuels, moving emissions from ship’s exhausts to the energy supply chain.
To this end, a broad chorus has emerged across shipping’s value chain advocating for the IMO to take a well-to-wake approach across its targets and policy measures to consider the entire lifecycle of GHG fuel emissions from production to use. Various organisations1 are already warning that the IMO’s revised strategy cannot enable an efficient and equitable transition to a green shipping future if it fails to include the full emissions lifecycle.
First, only considering tank-to-wake emissions will disincentivise investment in, and production of green alternative fuels such as e-fuels and green methanol produced from a renewable energy supply chain, whereas a well-to-wake approach will spur a strong demand signal for green fuels and incentivise investments and uptake. For example, under the tank-to-wake approach, grey or brown ammonia and hydrogen produced directly from fossil fuels would be considered to have close to zero GHG emissions but will in reality emit more GHGs than green fuels on a well-to-wake basis.
Second, an unambiguous well-to-wake approach would provide clarity and confidence for investors, businesses, and decision-makers. Creating a strong demand signal for green fuels is key to enabling fuel suppliers and ports to invest in production and bunkering facilities1. Any ambiguity on this critical framing of targets and further regulation will add to uncertainty and risk for anyone investing and operating ships, only further postponing the inevitable transition.
Third, a well-to-wake basis is pivotal in enabling an equitable transition. Shipping’s fuel and energy transition can only happen with the urgency and scale needed if national governments and international regulators establish policy frameworks that make the transition and fuel production commercially viable, globally available, and accessible for all countries and companies alike. Shipping’s transition offers strategic development opportunities for developing countries through the creation of a global market for green fuels. A well-to-wake basis enables demand for green energy, unlocking these global opportunities. As explored in Trafigura’s recent report on global opportunities, a tank-to-wake approach would delay or inhibit global opportunities and instead only serve to push investment to developed economies.
The shipping sector must take rapid and ambitious actions to decarbonise in line with global climate ambitions. It is therefore imperative that any action is effective, practical and sustainable. The IMO’s adoption of a full lifecycle approach inclusive of all GHGs, across both its strategy and in the design of its further policy measures, is central to that.
By considering the entire energy supply chain’s emissions, shipping will have taken a vital step in addressing the global climate emergency and safeguarding the planet for future generations.
This open letter to IMO member states has been signed by:
Alicia Eastman, President at InterContinental Energy
Maxime Van Eecke, Chief Commercial Officer at CMB
Rasmus Bach Nielsen, Global Head of Fuel Decarbonisation at Trafigura
Sam Yarrow-Wright, Policy Manager at the Environmental Defense Fund
Sanne Frías Henriksen, Head of Decarbonisation, Regulatory and Public Affairs at AP Moller-Maersk
Ingrid Sidenvall Jegou, Project Director at the Global Maritime Forum
The signatories are all active in the Getting to Zero Coalition. The views expressed are those of the authors alone.
1 Including the International Bunker Industry Association, the Institute of Marine Engineers Scientists and
Technologists, the World Shipping Council and the Environmental Defense Fund