Answer
MEPC realized that technical and operational measures are not enough to reduce GHG in shipping. So to provide economic intensive for marine industry to reduce its dependency on fuel oil and invest in more fuel efficient ships and technologies to operate ships in an efficient manner
“MBM means Market-Based Measure. It uses economic incentives to reduce shipping GHG emissions. A feebate is a combination of fee and rebate: ships or fuels emitting above a benchmark pay a fee, while cleaner ships or fuels performing better than the benchmark receive a rebate or financial incentive. Its main purpose is to close the price gap between fossil and low/zero-GHG fuels and accelerate maritime decarbonization.”
A common MBM concept is Feebate = Fee + Rebate.
- Fee: A ship or fuel with GHG intensity above a prescribed benchmark pays a charge.
- Rebate: Revenue collected is then used to reward ships/fuels performing better than the benchmark, or to support zero/near-zero emission fuels and technologies.
Why IMO considers MBMs
MBMs can:
- Reduce the cost gap between conventional fossil fuels and expensive green fuels.
- Encourage early adoption of ammonia, methanol, hydrogen, sustainable biofuels, etc.
- Promote energy-efficiency improvements.
- Generate revenue that may support developing countries and maritime decarbonization.