IAPH calls for revenues from Market Based Measures to be invested in port infrastructure

As the UN-recognized NGO representing the world’s ports, the International Association of Ports and Harbors (IAPH) has submitted a commenting paper to IMO ahead of this week’s intersessional meeting of the IMO Working Group on Greenhouse Gas (GHG) emissions, which is in turn preparing the ground for the crucial upcoming Marine Environmental Protection Committee (MEPC 77) in November.

The case for MBM revenue allocation to land-based infrastructure

In the submission, IAPH advocates that a significant share of the revenue generated from an MBM should be allocated to those investments in ports, of developing countries in particular, that facilitate the decarbonization of shipping.

IAPH Managing Director Patrick Verhoeven commented: “We all know that decarbonizing shipping is much more than decarbonizing ships. It’s about the whole supply chain. A lot of the investments will have to be made on land and in ports. 

“Our proposal is to consider port-related infrastructure including bunkering infrastructure as part of the investments that could be funded through such market-based measures, especially in developing countries in order to close the gaps in energy transition. We hope that with this contribution that we will help to bridge the divides in the IMO on this very delicate discussion.”

A recent study made in 2020 by UMAS and the Energy Transitions Commission for The Getting to Zero Coalition estimates that the scale of cumulative investment needed between 2030 and 2050 to achieve the current IMO target of reducing carbon emissions from shipping by at least 50% by 2050, is approximately USD 0.8-1.2 trillion. 

If shipping was to fully decarbonize by 2050, this would increase the total investments needed to between USD 1.2 and 1.6 trillion. The biggest share of investments is needed in the land-based infrastructure and production facilities for low-carbon fuels, which make up around 87% of the total investment. Storage and bunkering infrastructure would account for half of these investments.

The Getting to Zero Coalition is a partnership between the Friends of Ocean Action, the World Economic Forum and the Global Maritime Forum, which recently led a call to advance the IMO targets and achieve full decarbonization of shipping by 2050. This was co-signed by IAPH as a supporting organization.

The need to nip the bud of demand uncertainty in capital investments

The commenting paper also mentions that such investments suffer from the ‘chicken and egg’ dilemma, with ports unlikely to make investments in this infrastructure and related facilities if there is no obvious demand for them as the risk of being left with large, stranded assets is too high. Equally, shipping companies are unlikely to invest in zero carbon fuels or onshore power provisions if no infrastructure is available in ports.

IAPH argues that financial support to decarbonization investments in ports, of developing countries in particular, through revenues generated from an MBM will help resolve this deadlock and ensure simultaneous global deployment of ship-based technologies and onshore infrastructure.

Patrick Verhoeven concluded: “This matter belongs to the much broader issue of narrowing the divide between developed and developing countries in terms of port infrastructure related projects and initiatives targeting the decarbonization of shipping beyond bunkering. This includes the provision of Onshore Power Supply and that of port incentives to low emission vessels as well as optimization of port calls. 

“This is also clearly recognized under the IMO-Norway GreenVoyage2050 project which targets capacity building in developing countries in all four key areas identified by the 2019 IMO Ports Resolution. IAPH has signed up as an official partner of GreenVoyage2050 to assist in training and capacity building.”

The IMO Ports Resolution was adopted in 2019 as a result of the initiative originally taken the government of Canada and IAPH, to encourage voluntary cooperation between the port and shipping sectors to contribute to reducing GHG emissions from ships. One of the key identified actions to be promoted is the safe and efficient bunkering of alternative low-carbon and zero-carbon fuels in ports.

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