Shipping’s climate deal sets up battle over pollution calculations for gas and biofuels

The IMO will set emissions intensity levels for different fuels that decide how ship owners will be rewarded or penalised for using them in new green push

At the International Maritime Organization (IMO) this month, governments agreed that, from 2028, all the world’s big ships will have to cut their emissions in line with targets – or face financial penalties.

Ship owners must reduce the amount of greenhouse gases they emit per unit of energy, against 2008 levels, by 30% by 2035 and 65% by 2040 on their way to net zero around 2050.

Each ship’s emissions will be calculated by the IMO from a bunker delivery note, showing what type of fuel the vessel has loaded.

Every type of fuel – from those based on fossil gas and oil, to biofuels and green hydrogen – will be assigned an emissions intensity figure, currently being worked out by a group of experts.

This calculation will decide whether a ship running on a certain type of fuel is eligible for financial rewards for over-achieving the new emissions reduction goals or liable to pay for failing to meet them. The shipping industry accounts for around 3% of global greenhouse gas emissions.

With billions of dollars and millions of tonnes of greenhouse gas emissions at stake every year, this seemingly obscure number-crunching process has attracted the attention of marine fuel suppliers, environmentalists and governments.

Supporters of liquefied natural gas (LNG), biofuels and a green hydrogen-based fuel called methanol are submitting proposals to the IMO, arguing for lower emissions intensity calculations, backed by governments supportive of each technology.

The politics of emissions data

The final figures will be proposed by 13 IMO-appointed experts, collectively known as the “GESAMP-LCA working group” next year, and then adopted by governments, before the new emissions rules come into force in 2027.

Constance Dijkstra, IMO policy manager for green advocacy group Transport & Environment, said the idea of appointing these academics and technicians was to protect the decisions from political interference. But the group has to take “a bit of a political decision on certain aspects”, she added.

An industry group backing gas as a shipping fuel has been attempting to downplay fears about methane leaks, for example, while the Brazilian government has been promoting biofuels as a solution through cherry-picking scientific studies and hosting cocktail parties at the IMO talks.

For now, most shipping companies are choosing LNG in an attempt to reduce their emissions. A study by shipping standards-setter DNV found that the number of LNG-fuelled ships is growing every year and, with current orders alone, will at least double from today’s levels by the end of the decade.

But, while LNG may be the industry’s choice because of its ready availability, Bryan Comer from the International Council on Clean Transportation (ICCT), a nonprofit research organisation, estimates that the new emissions agreement means LNG-powered ships will face financial penalties by 2032 at the latest. “I would steer clear of LNG,” he said.

LNG is a fossil fuel

The climate benefits of LNG are also hotly disputed. Outside the IMO’s London headquarters on the first day of the talks last Monday, Ocean Rebellion protesters handed out a cut-out cardboard sponge with a speech bubble saying “That’s greenwash” to delegates.

Instructions on the back asked them to “wait for someone to mention LNG as if it’s not a fossil fuel – which of course it is – and wave it majestically in the air”. “You can accompany the wave with an appropriate noise,” the text read, adding: “We suggest blowing a raspberry.”

Inside the building, a participant list included two delegates from the Society for Gas as a Marine Fuel (SGMF). A proposal the trade association has submitted to the IMO shows it is attempting to influence the emissions intensity calculations for gas.

The most uncertain element in these figures is how much of a particularly potent greenhouse gas called methane is assumed to leak out into the atmosphere unburned.

Methane leakage

This can escape at any stage of the gas supply chain, from when it’s extracted from the ground, to when it’s transported by pipeline, or stored in a tank or a ship’s engine.

Advanced technology like satellites has revealed that these leaks are worse than thought. A study last year found that importing gas to burn for electricity can be more polluting than using local coal for the same purpose.

In a 145-page submission seen by Climate Home, the SGMF downplays this issue of methane “slip” (leakage from a ship’s engine), citing a study suggesting that for a particular type of engine the slip rate is just 2.6%.

According to Comer, this is lower than the IMO’s assumed slip rate of 3.5%, the ICCT’s of 6% and Germany’s of 8.5%. The SGMF’s rate is low, he said, because it is based on leakage “in the laboratory under ideal conditions”.

“It matters what these engines are actually emitting when they’re being operated,” he emphasised.

The IMO’s assumptions about the methane leakage rate will heavily influence the emissions intensity figures set for LNG and thus the emissions reductions ship owners using LNG will be able to claim.

The SGMF’s submission is backed by the West African nation of Liberia, where many ships are officially registered. But another submission from Brazil pushes back, saying that while LNG “is often promoted as a cleaner alternative compared to fossil fuels in the energy transition context, fugitive methane emissions along its production and distribution chain can undermine the expected environmental benefits”.

Biofuels for shipping

While talking down gas, Brazil on the other hand has been lobbying hard to promote biofuels, like those it makes from sugar, corn and soy, as the solution to shipping’s emissions. Other potential fuels include animal fats, used cooking oil and manure.

At the recent IMO meeting in London, the Brazilian government organised an event in the main hall entitled “how to identify sustainable biofuels in maritime energy transition”. Afterwards, it hosted a reception at which delegates were served free caipirinha cocktails described as “very alcoholic” by one delegate and “great” by another.

The day after, paper flyers labelled “factsheet” were scattered across the venue promoting biofuels as “an immediate and effective solution for decarbonization of transportation”.

The factsheet, sporting the name of University of São Paulo sugarcane chemistry professor Glaucia Mendes Souza, cited a review by Montana State University’s food and health lab of 224 scientific studies on the effects of bioenergy on food security, which was published in Nature in 2021.

It used this research to claim that in the world’s poorest countries – categorised in the study as low socio-demographic index (SDI) – “two-thirds of studies found that biofuels either improve or have no impact on food availability”.

Threat to food security

While this is accurate, the Brazilian factsheet did not mention the academic review’s findings that in all other SDI categories – low-middle, middle, high-middle and high – the studies were at least twice as likely to identify negative effects on food security than positive impacts, and overall 56% of the publications reported a negative effect of bioenergy on food security.

Dijkstra, from Transport & Environment, said many companies in Brazil are looking to produce biofuel from soybean oil, which they see as a byproduct of soybean meal that does not compete with food production.

Indonesia also argued at the IMO this year that palm oil is sustainable and could be used as a shipping fuel, she noted.

While the European Union’s FuelEU Maritime regulation limits the use of food-based biofuels in ships, the IMO’s rules will have no such restriction. “So everything is relying on those emissions [intensity] factors” for different types of biofuels, added Dijkstra.

Link to deforestation

Yet, indirect land-use change (ILUC) – when land is converted from growing food to biofuel production, causing more forests to be cut down for crops elsewhere – is unlikely to be accounted for in the life-cycle assessments for biofuels used by the shipping industry, experts say.

In submissions to the IMO, Brazil pushed against the inclusion of any quantitative assessments of this ILUC risk, arguing that they are unproven and inconsistent. Instead, the risks are set be considered on a case-by-case basis. 

In addition, governments are negotiating a set of qualitative environmental and social safeguards, stipulating that marine fuel producers should respect land and water use, human and labour rights, and social development. Dijkstra said these are vague and could be interpreted in a way that suits the producer.

Brazil has also resisted these guidelines, arguing that national policies would be sufficient and “a marine fuel producer should not be excluded for failing to meet a single criterion”.

Whatever the outcome of these debates, experts told Climate Home they expect ship owners to pursue biofuels, at least in the short-term until hydrogen-based fuels become more abundant.

Energy efficiency measures

While environmentalists widely agree they are preferable, the hydrogen-based fuels methanol and ammonia have their own issues. Comer said ammonia carries “safety risks” and there are uncertainties about how much nitrous oxide, a particularly damaging greenhouse gas, its use will emit.

Methanol can be close to zero emissions – but only if it is made from green hydrogen and carbon dioxide that has been captured from other processes. Methanol’s green benefits were set out in a proposal to the IMO by Nigeria, Turkiye and Malaysia, whose state-run energy firm Petronas produces the fuel and had a big presence in Malaysia’s delegation at last week’s talks.

Aoife O’Leary, CEO of Opportunity Green, a charity that uses legal research to push for climate solutions, said that, besides using greener fuels, shipowners could reduce their emissions with efficiency measures like sailing slower, using sails for propulsion and deploying electric batteries for shorter trips.

“All of these other fuels are going to be a lot more expensive and [the IMO’s emissions targets] should hopefully start to make shipowners actually think about what they can do in the meantime to reduce the fuel they have to use,” she said.

Cover photo:  This LNG bunkering vessel agility's role is to fuel other ships with liquified natural gas (IMAGO/Presse-Photo Horst Schnase via Reuters Connect)