What will happen to IMO’s NZF carbon tax proposal the next time around?

Following last year’s failure of IMO’s MEPC to adopt the “Net Zero Framework for Shipping” (NZF) carbon tax proposal, the issue comes up for consideration again in November.

A new insight brief written for the Getting to Zero coalition, “Uncertainty at the IMO: Three scenarios and their consequences for shipping’s transition,” explores the different plausible outcomes for NZF in November.

The potential scenarios range from adopting the NZF “as is,” to a single-tier fuel standard with lower compliance costs, to a scenario with the removal of economic elements altogether. Each will have materially different impacts on enforcement, investment signals, revenues, low-income countries, and regional policies.

The insight brief concludes that:

Alternative scenarios currently on the table would provide little or no demand signal and revenue to support uptake of the scalable zero-emission fuels needed in the long run

The alternatives to the NZF being discussed would still raise costs for lower income countries, but would severely limit the capacity to support their transitions and mitigate disproportionate impacts

Alternative scenarios are more likely to encourage regulatory fragmentation, heightened investment risk, and decreased alignment with the IMO’s overall emissions reduction strategy.

While the Net-Zero Framework is imperfect, the brief says, many of these risk factors could be managed through the development of its guidelines for implementation

• Download the full insight brief HERE

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