Japan's recent proposal at the International Maritime Organization (IMO) could be seen as a serious threat to developing countries. A new analysis from Opportunity Green ahead of the negotiations for the acceptance of the carbon neutrality framework (NZF) in November and December 2023 in London highlights the risks posed by this proposal.
Proposed Changes and Their Impacts
Japan's proposal includes the removal of the carbon neutrality fund, which is considered one of the main pillars of "economic measures." These changes could significantly reduce the chances of achieving the revised 2023 strategy. Instead, it suggests that the purchase of surplus units (SUs) be introduced as the primary mechanism for addressing compliance deficiencies, and also introduces a "direct partnership" led by industry as a global financing mechanism.
Risks Associated with Japan's Proposal
Opportunity Green highlights four interconnected risks for IMO member countries in this scenario:
- Elimination of fair transition: The global IMO fund is a tool to support developing countries striving for a clean transition in the shipping industry. Without this fund, it is expected that between $10 to $15 billion in sustainable revenue to assist these countries will be lost.
- Reduced power of countries in shaping maritime transition: By replacing the fund with "direct partnerships," decision-making is handed over to companies, which could benefit large corporations.
- Weakened incentives for carbon-free energy: The use of SUs for compliance undermines incentives for the early adoption of carbon-free energy and fuels.
- Weakened greenhouse gas reduction: Weakness in incentives for carbon-free energy could lead to continued use of high-emission fuels such as liquefied natural gas (LNG).
In the upcoming negotiations in November and December, countries are called to uphold the key principles of NZF and accept this agreement in its current form to maintain the chances of achieving the revised IMO strategy and supporting developing countries.
Em Fenton, Chief Executive of Opportunity Green, emphasized that under Japan's proposal, developing countries would relinquish their power to shape the global maritime transition to the private sector, without any guarantees for fairness and equity.
