The revised and tougher climate goals set by the IMO in cutting harmful greenhouse gas (GHG) emissions from ships will likely affect the vessels on the Shipping Corporation of India’s 59 fleet and, also the valuation of the company throughout the ongoing privatisation exercise.
The revised & updated GHG strategy, accepted by the IMO’s Marine Environment Protection Committee (MEPC), includes an improved common ambition to reach net-zero GHG emissions from international shipping close to 2050 and an obligation to ensure uptake of alternative zero and near-zero GHG fuels by 2030.
The revised strategy also includes suggestive checkpoints to cut the total annual GHG emissions from international shipping by at least 20%, striving for 30%, by 2030, compared to 2008; and further by at least 70%, striving for 80%, by 2040, compared to 2008.
The IMO’s previous climate goals could only halve emissions from the global shipping industry, a giant 1 billion tonnes a year emitter – by 2050.
The Indian Shipping Corporation’s vessels will be at a financial disadvantage in meeting the climate change targets set by the IMO,” said an industry insider.
Explaining his view, the official said the average age of a shipping company’s fleet is 13 years
These vessels are not technologically advanced as they were brought in some 16 years ago when climate goals were not into consideration. Moreover, many of the vessels of SCI are not advanced enough to handle additional equipment on board to reduce harmful emissions, and that might pose challenges in meeting the IMO targets. Due to limited options, the Shipping Corporation of India will have to opt for slow steaming of ships to lower GHG emissions.
With SCI incapable of undertaking transitional actions to lesser emissions due to lack of funds, its ships will end up paying a higher carbon charge being proposed by the IMO. The proposed levy will be linked to the carbon emitted by a ship.