25/07/15
Q&A: Ships to use bioblends to comply with new IMO rule
Sao Paulo, 15 July (Argus) — Bioblends are the best short-term option for ships
to comply with International Maritime Organization (IMO) regulations set to be
approved in October, according to Andrea Lucchesi , professor at the University
of Sao Paulo and an expert on the impact of maritime regulations. Lucchesi, who
presented research on the potential economic impacts of the IMO-approved carbon
pricing mechanism at the Marine Environment Protection Committee (MEPC) 83 in
April, spoke to Argus about the recent IMO agreement and the future of
decarbonization in shipping. Edited highlights follow. Under the current IMO
carbon pricing mechanism, which fuel emerges as the main solution for
decarbonization? New studies are being conducted in this regard. As the details
of the mechanism will still be defined in October, there is no clarity regarding
the next bunker fuels, especially because we cannot just consider the
decarbonization potential, but also the cost of port infrastructure and vessel
adaptation. Also, the ports will adapt very slowly. What I can say is that the
first fuel to be adopted in the transition phase will be the marine biofuel
blends, because of their economic viability, emissions reduction potential and
supply availability. Is the agreement, as it progressed in MEPC 83, economically
and environmentally successful? The agreement approved on 11 April is historic.
It is the result of more than seven years of negotiation and is the first to
regulate an entire sector of the economy at the international level. Therefore,
we consider the agreement a success, even though it has been modified from its
initial design, and it is sufficient to achieve the goal of decarbonizing the
maritime sector by 2050. Have the GHG reduction targets been made too flexible
over the many years of debate? The study I conducted for the IMO aimed to
measure the impact of this pricing mechanism, because if we try to accelerate
decarbonization beyond market capacity, we will see very strong consequences,
especially in developing countries. A more rigid goal is not appropriate. Do you
believe the agreement will be approved in October as it was designed, despite
the US opposing the measure? Yes. The US will try to influence the matter, but
there is considerable support for the measures. They have already been widely
debated in recent years. Is the mechanism, as it progressed in the April
meetings, economically viable for the entire maritime chain to adapt? The
agreement will impact countries very differently. We were careful to assess the
impacts on food inflation and the potential impact on malnutrition in developing
countries. There will be socioeconomic impacts, so the measures needed to be
gradual, as they will be. For example, there needs to be time for ships to be
retrofitted, investment in technical measures to increase efficiency, and fuel
replacement. Another point is that port technology needs to be adapted.
Therefore, the mechanism should begin pricing in 2028, with reduction targets
ranging from a modest 4-17pc for the first year. In any case, the sector will
have to adapt, because the agreement will be effective in punishing those who do
not comply. This agreement will work. The IMO is an institution with the
capacity to effectively monitor and punish, and there are mechanisms in place to
do so. How much is expected to be raised from the carbon pricing? The revenue
generation potential, as it stands today, is $1bn/yr in the initial years, with
a growth trend in subsequent years. This revenue is intended to mitigate the
socioeconomic impacts of the mechanism on small island nations and developing
countries. By Gabriel Tassi Lara and Natalia Coelho Send comments and request
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