Japan’s flawed shipping proposal leaves developing countries adrift

A fresh assessment by Opportunity Green highlights the substantial risks associated with Japan's proposal at the International Maritime Organization (IMO), as countries prepare for the November and December adoption negotiations of the Net-Zero Framework (NZF) in London. The proposed changes to the NZF would substantially undermine the chances of implementing the 2023 Revised Strategy.

The key alterations encompass: eliminating the Net-Zero Fund, the primary economic measure; transforming Surplus Units (SUs) purchases into the main compliance deficit resolution method; and instituting an industry-led "direct contribution" as a global financing mechanism.

Opportunity Green identifies four interconnected dangers for IMO member states in this proposed scenario: 1. Forgoing a fair and equitable transition: The global IMO Fund is essential to assist climate-vulnerable developing countries in their shipping sector's clean transition. Commitments under the Revised Strategy required countries to support these nations with investments in zero-emission ship technologies, energy, and resilient trade infrastructure.

Removing the Fund would eliminate the enforcement mechanism for the Framework. 2. Depriving nations of control over the maritime transition: Replacing the Fund with "direct contributions," where companies decide where revenues are allocated, effectively shifts decision-making power to the private sector. This could result in larger fleet owners redirecting compliance revenues back into their own supply chains and infrastructure, rather than towards the global sector's needs or climate-vulnerable developing countries.

3. Diminishing incentives for zero-emission energy: Employing SUs for compliance would weaken the incentives for early adoption of zero-emission energy and fuels, allowing companies to effectively pay to pollute instead of investing in their transition. 4. Thwarting emission reduction: Incentives for zero-emission energy and fuels would be weakened, potentially leading to prolonged use of high-emitting fuels like fossil-based liquefied natural gas (LNG) and biofuels. This would hinder shipping's ability to meet the emission reduction targets countries have pledged.

Countries are urged to retain the core principles of the NZF and adopt the agreement as-is during the upcoming negotiations in November and December to maintain a fighting chance at meeting the IMO Revised Strategy and fulfilling their international legal obligations on climate change. Em Fenton, Senior Director at Opportunity Green, warned that Japan's proposal would force countries to relinquish control over the global maritime transition to the private sector, with no safeguards or guarantees to promote justice and equity.

The ones who would suffer the most are climate-vulnerable and developing countries, representing the global majority. The Net-Zero Framework, as agreed in April of the previous year, remains the most balanced, fair, and effective solution available for driving the clean transition.