Trump Administration threatens backers of IMO net zero proposals

A joint statement by US Secretary of State Marco Rubio, Secretary of Commerce Howard Lutnick, Secretary of Energy Chris Wright, and Secretary of Transportation Sean Duffy, said the Trump Administration “unequivocally rejects” the net zero framework proposal that the IMO is aiming to reach agreement on in October, reports Seatrade Maritime News.

The joint statement said the Trump Administration, “will not tolerate any action that increases costs for our citizens, energy providers, shipping companies and their customers, or tourists”.

However, the statement did not merely reject the IMO’s net zero proposals but also said that the US would retaliate against nations backing them at the MEPC meeting in October.

“We will fight hard to protect the American people and their economic interests. Our fellow IMO members should be on notice that we will look for their support against this action and not hesitate to retaliate or explore remedies for our citizens should this endeavour fail.”

There was no mention of what shape retaliation or remedies might take, but tariffs have very much been the Trump Administration’s weapon of choice.

The strongly worded rejection of the proposals follows the US delegation walking out of a vote at extraordinary meeting of the MEPC at the IMO in April. Despite the US walkout and some member states either abstaining or voting against the proposals the necessary majority was attained to take the framework forward to the next meeting in October.

The Trump Administration’s threat of retaliation against countries backing the proposals will add further difficulties to what was already expected to be a challenging meeting in October.

In May DNV Maritime CEO Knut Ørbeck-Nilssen, told a webinar, “Considering that the US withdrew from the whole process, I think it is still uncertain what will happen in October.”

While those pushing for net zero targets were critical of the proposals for not providing enough incentives for the switch green fuels such as ammonia or methanol, the Trump Administration railed against potentially higher costs for ship owners and operators using LNG and biofuels with the imposition of what it sees as a global carbon tax.

“Whatever its stated goals, the proposed framework is effectively a global carbon tax on Americans levied by an unaccountable UN organization. These fuel standards would conveniently benefit China by requiring the use of expensive fuels unavailable at global scale,” the statement said.

China is at the forefront of developing alternative fuels. According to the Methanol Institute when it comes to developing green methanol production China represents more than half of the total announced capacity to 2030 and in the near term will provide 75 to 80% up to 2028.

Rubio, Lutnick, and Duffy stated, “These standards would also preclude the use of proven technologies that fuel global shipping fleets, including lower emissions options where US industry leads such as liquified natural gas (LNG) and biofuels. Under this framework, ships will have to pay fees for failing to meet unattainable fuel standards and emissions targets.”

 

Call for ending attacks on ships in Red Sea

The International Maritime Organization (IMO) on Friday demanded an immediate cessation of hostilities against ships and seafarers navigating through the strategic Red Sea and Gulf of Aden. The call comes in response to increasing maritime threats in these crucial waterways.

The IMO's Maritime Safety Committee adopted a resolution in London condemning these acts as "illegal and unjustifiable," highlighting their direct threat to the freedom of navigation and the substantial disruptions they cause to regional and global trade.

This resolution marks the first such formal stance by the IMO member states since the seizure of the MV Galaxy Leader cargo ship by the Yemeni Houthi group in November in the Red Sea.

"Since then, around 50 dangerous and destabilizing maritime attacks have occurred, resulting in the loss of several seafarers' lives, while the 25 crew members of the Galaxy Leader remain hostages," the agency reported, calling for their "immediate and unconditional release."

The resolution criticized the Houthis' actions for endangering lives, impeding vital humanitarian aid deliveries, increasing the cost of such aid, and destabilizing the region. It also emphasized the importance of resolving the crisis through peaceful dialogue and diplomacy.

IMO Secretary-General Arsenio Dominguez appealed to governments and relevant organizations to assist affected seafarers and to intensify efforts to resolve the crisis. He highlighted the Red Sea's significance as one of the world’s busiest maritime routes, especially for oil and fuel shipments.

Shipowner demands stopping construction of fuel oil powered vessels

Precious Shipping boss Khalid Hashim has called on the IMO to put a hard stop on building fuel oil burning ships from 2030 and a scrapping of all vessels over 20-years old by 2035.

Along with a carbon tax starting from January 01, 2024, the radical proposals were put forward by Hashim, Managing Director of Precious Shipping and presented to the IMO last month via the Thai delegation through a video link, as well as to the Philippines IMO delegation, and at a recent HSBC conference.

The proposals from the Bangkok headquartered shipowner break down into three areas – a carbon tax, a hard stop on building fuel oil powered ships, and a mandatory scrapping of vessels over 20 years.

A carbon tax is already an item on the agenda for the key IMO MEPC80 meeting next month aimed at revising the industry’s ambitions for greenhouse gas emission reductions.

Hashim said the IMO should impose a tax of US$100 per metric ton (pmt) of CO2 emitted from January 01, 2024, increasing to US$200 pmt from 2030. Such a tax would increase the cost for ships engines burning fuel oil by US$320 pmt from January 01, 2024, and US$640 pmt from 2030.

He said it would provide massive resources exclusively for decarbonizing shipping and a universal tax would stop similar taxes by others.

The funds could be used for R&D into alternative fuels, subsidizing the costs of first movers, and building bunkering infrastructure. It would also push shipyards to build more zero emissions vessels (ZEVs) with a requirement of 5,000 such new builds a year to meet a 2050 zero emission target.

The second proposal involves a hard stop on building vessels that burn fuel oil and effectively forcing shipyards to produce ZEVs. “The IMO must put a hard stop to any fuel burning ships delivered by shipyards on or after January 01, 2030,” he stated.

Hashim cited the example of the automotive industry where a growing number of countries have set a deadline on production and sale of internal combustion engine vehicles. “Once they were given a deadline after which they could not produce or deliver diesel engine cars, significant numbers of electric cars are rolling off the assembly lines in every serious automotive manufacturing country,” he said.

This would give clarity to owners, shipyards, charterers and consumers with hard deadlines. He said it would also increase the capacity at yards needed to produce ZEVs, encourage charterers to enter into long term contracts for zero emission vessels, and for end consumptions to accept the increased cost in shipping.

The third proposal relates to a deadline by IMO for the scrapping of all ships over 20 years old by 2035.

“It will immediately reduce GHG emissions from the gas guzzling ships built in the past when fuel oil was not thought of as the culprit, that we can now see, all too clearly,” Hashim said.

The proposal would shrink the supply ships forcing clients to pay more shipping services the profits of which could be used to pay for the multi-trillion dollar cost of replacing the fuel oil burning fleet.

Renowned shipping economist Martin Stopford has estimated that replacing fuel burning ships with ZEVs will cost between US$1 trillion to US$1.5 trillion in a good case, or US$2 trillion to US$3 trillion in a poor case.

It would also accelerate the regulations for using alternative fuels, the training of crew, and creation of bunker hubs.