Trinidad and Tobago can cash in on Net-zero framework

THIS country may see economic benefits if the International Maritime Organization’s (IMO) Net-Zero Shipping Framework (NZF) becomes law. The framework’s intention is to see a reduction of emissions in the maritime sector.

It was approved in April and is set for adoption this month pending a vote which will take place during the Marine Environmental Protection Committee meeting from October 14-17.

108 members are eligible to vote, including ten from Caricom. If adopted, it will come into effect in 2028.

The framework seeks to reduce greenhouse gas (GHG) emissions from international shipping to align with the 2050 net-zero target.

A news release from the Trinidad and Tobago Energy Chamber’s website on October 6 said that key components include a Global Fuel Standard (GFS) setting annual GHG intensity reduction targets, a two-tier carbon price mechanism, and a credit trading system funded by penalties to reward zero and near-zero emission fuels and support a just transition.

The Framework will apply to all oceangoing ships over 5,000 gross tonnage (GT). These ships are responsible for over 85 per cent of global shipping emissions and are already covered by reporting requirements for fuel data collection. Ships under 5,000 GT are currently not covered.

If adopted, this creates opportunities for countries like TT to seek new markets for petrochemical products produced domestically.

Essentially, the NZF encourages the use of cleaner fuels or technologies. If a ship’s GHG fuel intensity is too high, it will pay a price corresponding to the greenhouse gases it emits above certain thresholds. Conversely, ships will be rewarded for using cleaner fuels.

Methanol, ammonia, and LNG can be used as maritime fuels under this framework since they emit less when consumed than traditional diesel or heavy fuel oil. This provides opportunities for producers in TT and it also opens up the possibility for low-carbon fuel bunkering.

These fuels however are are typically three to four 4 times more expensive today but will reduce over time with increased production and lower technology costs.

Some countries in the Caribbean are concerned that the NZF will significantly push up their shipping costs, which are obviously a very significant issue for small islands states.

The Methanol Institute has recently stated that, “Methanol producers are ready to deliver. Today, there is already enough methanol available to fuel the ships in operation.

The Ammonia Energy Association has also weighed in and said that The Net-zero Framework is a good step in the right direction.