News / WSC steps up drive for cleaner ship fuel with 'Green Balance Mechanism'

Photo: © Sulit Photos | Dreamstime.com

The World Shipping Council (WSC) has announced a proposal for a Green Balance Mechanism, which would levy massive taxes on conventional ship fuels and aim to close the price delta between grey and green fuels.

WSC said the cost of green fuels was currently around four times greater than conventional fossil fuels, a cost gap liable to increase, given the diminishing desirability of the latter.

Each year, the green balance fee would scale depending on the availability of green fuel and the market price of each fuel.

“Global climate regulations are necessary to make it possible for carriers to operate on green fuels, and to incentivise fuel and energy providers to invest in new production capacity,” said the WSC.

Evergreen CEO KH Wu agreed and called for “collective action” among shipping lines. He said: “It is essential to have a new approach to greenhouse gas pricing that would drive demand for cleaner fuels from the start of the transition. We need the support of authorities, vendors, and customers.”

One advantage of the proposal is that it sidesteps a great deal of time-wasting ‘emissions-avoidance’ greenwash, generated under the auspices of carbon pricing, such as the erroneous planting of unsuited trees and pledges not to cut down unthreatened forests, in favour of targeting the root cause of carbon emissions – the production and consumption of fuel.

Rolf Habben Jansen, CEO of Hapag-Lloyd, said: “This greenhouse gas pricing mechanism aims to promote a competitive shift to low-emission fuels… [and] promotes the production of alternative fuels and minimises the economic burden on all stakeholders, ensuring a level playing field. These are crucial factors for a successful energy transition in maritime shipping.”

WSC said its members hoped to make it “economically rational and attractive for both shipowners and energy providers to invest in fuels and technologies that deliver deep greenhouse gas reductions from the day the regulation takes effect”.

But experience is not in the proposal’s favour, representing a level of ambition well above and beyond that seen after IMO MEPC80 last year, and above that of COP28. Both summits ended with watered-down compromises at the behest of China, Saudi Arabia and several other countries.

WSC members, nonetheless, hope their greenhouse gas pricing proposal will be adopted at IMO MEPC81, in March.

“We call on IMO member states to take decisive actions that reward early adapters by compensating truly green vessels corresponding to their emission’s reductions. This approach is critical for accelerating the retirement of fossil-fuelled vessels,” said Maersk CEO Vincent Clerc.