This week our sister publications Travel Daily and Cruise Weekly reported on a milestone development in the cruise sector, which now looks likely to be subject to the first-ever levy on carbon emissions from 2028.
The Marine Environment Protection Committee in London saw a majority of member states vote in favour of a proposed International Maritime Organization (IMO) carbon framework, which will see owners of any ship weighing more than 5,000 gross tonnes whacked with a maximum of US$380 charge for every tonne of carbon dioxide emitted.
Under the framework, ships will need to reduce their annual greenhouse gas fuel intensity over time, while vessels emitting above emissions thresholds will have to acquire remedial units to balance its pollution deficit.
Ships that emit above those thresholds will be able to balance their deficit by either transferring surplus units from other ships or use surplus units they have already banked.
Part of the framework will also see the creation of the IMO Net-Zero Fund, which will be charged with collecting pricing contributions from emissions.
The incentive structure around the fund will see low-emission ships rewarded, while marine research across areas like technology will be the recipient of capital injections – especially innovation that supports the environment of smaller developing countries.
All of this is, of course, designed to cajole the entire shipping industry to transition quicker to net zero emissions, but if formally adopted in October, could equate to cruise companies forking out billions of dollars in the process.
The IMO estimates the scheme could generate $10 to $13 billion in annual revenue from all ship operators, with cruise ships representing a relatively small chunk of that figure.
Cruise Lines International Association (CLIA) already has its own net zero policy in place, regularly updating the market on the strides its member brands are making to become net zero by 2050.
The more near-term objective from CLIA is to reduce the rate of carbon emissions by 40% by 2030, the major pillars for achieving this being LNG investment; advanced wastewater purification systems; alternative sustainable fuels and battery/hybrid power; shore power supply; as well as exhaust gas cleaning systems that reduce sulfur oxide levels.
While some people in the industry might think the body’s goals don’t go far enough, it’s also fair to say that CLIA is not guilty of sitting on its hands when it comes to reducing the sector carbon footprint of its members either.
The moral imperative of looking after the planet aside, CLIA must surely have self-preservation entwined in its emissions policies, especially given the arguably disproportionate treatment the industry receives from environmentalists.
More prominent in Europe, cruise ships have been regularly picketed by protesters at various ports in recent years, prompting a handful of brands to skip ports, or in some cases, cut the destination from itineraries altogether.
Cursed by their sheer size, cruise ships are easy targets for people sincerely wanting to arrest the scourge of climate change.
But will this latest framework make the gains the world really needs, and how will it impact the cruise sector when it comes into play?
When asked about the latest developments in London, a spokesperson for CLIA said the body will continue to analyse the framework on behalf of its members and how it could help close the cost gap between zero- and near-zero greenhouse gas fuels and traditional fuels.
While CLIA participated in the IMO framework process, reading between the lines, it is clear the body holds a few concerns about the model of levy being floated.
“It remains critically important that the IMO requirements remain realistic, and that regional or national revenue-generating programs are avoided or harmonised with IMO requirements to prevent double counting of emissions or related payments into more than one system,” CLIA said.
“CLIA and our cruise line members remain committed to pursuing net zero emissions by 2050 and will continue to pursue multiple paths to fulfil that ambition.
“We also continue to call on governments and fuel providers to do their part to help bring the needed alternative fuels to the market at scale.”
Questions remain however about the IMO framework’s overall effectiveness in reducing emissions.
Consultancy UMAS for example has projected the policy will cut emissions by 8% by 2030, certainly not a figure that would blow the hair back of ardent marine conservationists.
One group of stakeholders who are clearly rankled by the outcome are smaller nations, with most facing an existential threat associated with global warming.
A group statement from Fiji, Kiribati, Nauru, Palau, the Cook Islands, and others lambasted the IMO framework for not going far enough.
Many of these smaller island nations had unsuccessfully pushed for a flat levy aligned with the 1.5°C warming limit, meaning every tonne of carbon would be levied at the same rate.
Vanuatu’s Ralph Regenvanu took aim at the big superpowers and oil-rich nations for watering down the measures.
“Let us be clear about who has abandoned 1.5°C, Saudi Arabia, the US and fossil fuel allies pushed down the numbers to an untenable level and blocked progress at every turn,” Regenvanu argued.
“These countries and others failed to support a set of measures that would have gotten the shipping industry onto a 1.5°C pathway, and they turned away a proposal for a reliable source of revenue for those of us in dire need of finance to help with climate impacts.”
Some industry analysts have suggested a flat levy would have raised US$60 billion annually, whereas the current agreement is expected to generate around US$10-13 billion.
In all of the green fog of war, it’s important to remember that cruise ships emit about 0.2% of global emissions a year from fossil fuel consumption, according to insights from Griffith University.
Shipping more broadly is also pivotal for the global economy, carrying around 90% of global trade and contributing roughly 3% of worldwide greenhouse gas emissions.
With gamechanging developments recently announced by the likes of Viking on its first zero-emissions ship, it is also clear to see that brands are being incentivised already to ensure that even in high-energy consumption sectors like cruising, they deliver a sustainability dividend to travellers, the communities they visit, and the world.
