China opposes shift to new fuels in shipping

The International Maritime Organisation (IMO) is trying to transform shipping but China is having none of it.

The London based UN agency is attempting to get an agreement amongst nations and the shipping industry to effectively phase-out oil-based fuels. The ‘Intersessional Working Group on Reduction of GHG Emissions from Ships’ has been meeting to agree which measures and targets should be adopted. Much of the organisation seems to be working towards a ‘Net Zero’ by 2050 with organisations such as the International Chamber of Shipping advocating a form of levy on bunker-fuel as a mechanism to deliver this target.

China opposes this approach. Indeed, it appears that China opposes the target of phasing-out oil-based fuels by 2050. The Financial Times newspaper claims to have seen a letter from the Chinese to the IMO delegations of some other nations which asserts that “an overly ambitious emission reduction target will seriously impede the sustainable development of international shipping, significantly increase the cost of the supply chain and will adversely impede the recovery of the global economy”.

The letter continues; “developed countries are pushing the IMO to reach unrealistic visions and levels of ambition” of a flat-rate levy which “will lead to a significant increase in maritime transport costs”. China seems to be aiming to gain support amongst non-Western states, with Brazil, Argentina and Russia apparently in agreement with its position.

What appears to be motivating South American states in particular is a fear that more expensive fuels could reduce the competitiveness of their agricultural exports. China seems to be in part motivated by similar thinking, with it being both a significant importer of food and raw materials by sea as well as a large exporter of finished goods.

Agreement is necessary. If China does not co-operate any move to new fuel strategies will struggle to succeed. Many of the large shipping lines have already begun to invest in new fuel types for their vessels, with Maersk being one of the leaders in developing methanol as a marine fuel having ordered a further 6 ships with a ‘dual fuel’ methanol capability last week. All of this investment will fail if the Chinese cannot be persuaded of its merits.

Source: Ti Insights

Author: Thomas Cullen

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