IMO should adopt, then fix, the Net-Zero Framework

WHEN IMO member states voted 63-16 in April to approve the Net-Zero Framework, I called it a “faltering step toward net zero”.

Since then, the carbon price plan for shipping has been attacked from just about all sides of the decarbonisation debate.

Greens say it’s too puny to force a switch to truly sustainable fuels. Steep though its costs may be to shipping companies, they aren’t high enough to make green fuels competitive.

On the other side, petrostates and those with big bets on liquefied natural gas fuel say the NZF will fail in just about every way, increasing food prices while failing to force a shift to greener fuels.

Industry groups dislike the NZF’s complexity and opacity. Pacific Islands, stung by the rejection of their flagship carbon levy plan, have urged the IMO to fast-track work on its Net-Zero Fund, perhaps reasoning that if the NZF won’t save their islands from rising seas, they should at least get some money from it.

The US, a staunch opponent of any foreign tax it can’t control (but a big believer in trade policy as weaponry) called the NZF a “European-led neo-colonial export of global climate regulations”.

Some disgruntled African states – with considerably more recent and painful memories of colonialism — have evinced a similar fear. That of a regional cash grab, which will hike food costs and shovel cash from the developing world to the rich West.

(The US, with its roaring economy and tech sector, abundance of capital and expertise, natural resources and heavily protected maritime sector, is just about the only one thinking it would do badly out of the IMO regime, but that’s another story.)

Will the NZF be good or bad?

It’s hard to say, because the framework is just that: a broad outline with most of the fine print still missing.

It could be a disaster or a breakthrough in the global fight against climate change, maybe even both.

The outcome will depend on yet more painstaking diplomatic work by IMO member states — work that can only happen if the NZF is adopted.

And it should be adopted. The IMO process is still the best hope shipping has of a regulation that works and is fair.

The alternative — a patchwork of overlapping regional rules — would hurt the industry more and do little for the planet. Shipping would have little say over how the funds are spent. It would also miss out on green subsidies and, by extension, green fuels.

The NZF also gets some important factors right. This progress could be lost if the framework fails.

The idea that the IMO could adopt a carbon price, based on well-to-wake emissions measures and with some money set aside for poor and vulnerable countries — would once have been ludicrous, and is still kind of astonishing.

Many had feared the NZF would lock in fossil LNG, but so far states have mostly side-stepped that obvious trap. They should also guard against opening the door to crop-based biofuels, as others have argued in these pages.

Whether shipping gets the e-fuels that greens want will depend on whether states are willing to pay for their enormous costs. My guess is they won’t, at least not for many years.

But with the right mix of reward subsidies and strict limits on what counts as green, small contributions by many ships over time will add up to vast potential subsidies that can truly make a difference to the decarbonisation challenge.

In the meantime, pricing emissions will create a business case for efficiency technology, and for more climate-friendly sailing practices.

The changes that the NZF could trigger over time will be painful, but also mercifully gradual. They will be reviewed every five years, with plenty of opportunity for complaints and improvements.