The Week in Alt Fuels: A potential regulatory quagmire
Several countries argue that a report on a global carbon tax and fuel standard overlooks critical factors and presents misleading conclusions.
PHOTO: OCI's methanol plant in Beaumont, Texas, is part of the assets sold to Methanex. OCI Global
These nations have called for additional scrutiny of the comprehensive impact assessment (CIA) report submitted to the IMO in June by the United Nations Conference on Trade and Development (UNCTAD).
The CIA report was based on a study by class society DNV and evaluated various scenarios, including implementing a global carbon levy and a global fuel standard for marine fuels.
It found that a higher carbon levy of $150-300/mt of CO2-equivalent (mtCO2eq) would lead to a smaller reduction in global GDP by 2050 (0.08% reduction) compared to a lower levy of $30-120/mtCO2eq (0.14% reduction).
DNV noted that shipping sector could generate $776-982 billion in revenue between 2027-2050 through IMO mid-term measures. But to make that happen the measures will have to include a global fuel standard, a carbon levy of $150-300/mtCO2eq and a revenue disbursement system without flexibility or feebate mechanisms.
China, Saudi Arabia and the UAE have critiqued DNV's use of a well-to-wake (WtW) scope to model GHG trajectories for the CIA. They contend that the IMO's upcoming mid-term measures should not be based on a WtW framework.
Instead, they argue, GHG emission trajectories should assessed based on tank-to-wake (TtW) emissions, as only these emissions fall under the purview of global shipping.
India has proposed that the IMO should prioritise a revenue disbursement mechanism to address the economic impacts of mid-term measures. Revenue generated from the mid-term economic measures should be allocated towards projects that promote the use of low- and zero-emission fuels on ships, onboard carbon capture projects and green fuel bunkering infrastructure in developing and under-developed economies, India argues.
Egypt has called for further work to gauge the effects of proposed mid-term measures on the food security of small island and least developed countries. “Any measures to reduce GHG emissions that might lead to higher input and transport costs would translate into higher food prices, especially the basic and essential commodities,” Egypt said.
Bangladesh and Togo have criticised the CIA for neglecting key criteria for assessing the impacts of mid-term measures on states, including food security, socio-economic development and disaster response. The joint proposal recommends further work on the report to address these gaps and recommend involving other UN bodies and specialised agencies to improve the assessment of these factors.
In other news, OCI Global has sold its entire methanol business to Canadian Methanex, the world's biggest methanol producer. The deal is worth $2.05 billion and Methanex is acquiring OCI assets in the US and Europe, including a plant in Beaumont, Texas with capacity to produce 910,000 mt/year of methanol and 340,000 mt/year of ammonia. It also covers OCI HyFuels, which produces and supplies bio-methanol for bunkering. Methanex has yet to confirm whether any methanol produced at the US or European facilities will be allocated to bunkering after the deal is completed.
Class society Lloyd’s Register, US ammonia tech company Amogy and Norwegian clean energy firm RotoBoost will explore how they can apply new tech like hydrogen fuel cells, ammonia and methane cracking, and carbon capture and storage. The trio will explore if these technologies can reduce emissions for a container feeder fleet.
Terminal operator Hutchison Ports ECT Rotterdam (ECT) has collaborated with Rotterdam Shore Power (RSP) to equip its container terminals with shore power capabilities. RSP, a joint venture between Dutch electricity supplier Eneco and the Port of Rotterdam, will build and manage the shore power facilities.
By Konica Bhatt
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