The comprehensive strategy to achieve climate neutrality in shipping, focusing on reducing greenhouse gas (GHG) emissions adopted by the International Maritime Organization (IMO), aims to reduce GHG emissions from international shipping and phase them out as soon as possible.
IMO targets
Concrete targets are to reduce the carbon intensity (CO2 emissions per transport work) by at least 40% by 2030 compared to the 2008 carbon intensity levels, and to ensure that at least 5 % of the energy used by international shipping comes from zero or near-zero GHG emission technologies, fuels, and energy sources.
By 2040 the goal is to achieve at least a 70% reduction in GHG emissions, and by 2050 reach net-zero GHG emissions [1].
These targets are to be achieved by technical innovation aimed at promoting the development and global introduction of alternative fuels and energy sources while building capacity to support developing countries and ensure no one is left behind.
The 81st session of the Marine Environment Protection Committee (MEPC 81) earlier this year made significant progress on regulatory frameworks and guidelines to improve energy efficiency, manage marine fuels, and reduce GHG emissions.
Ahead of the MEPC 82
In addition to progress on the legal framework, MEPC agreed on the following steps, ahead of its next meeting (MEPC 82), scheduled for 30 September to 4 October 2024.
A few days before MEPC 82, the Intersessional Meeting of the Working Group on Reduction of GHG Emissions from Ships (ISWG-GHG) will meet for its 17th session in London from 23 to 27 September 2024. The group's report will be presented to MEPC 82 when it convenes thereafter.
Several different draft amendments to MARPOL Annex VI for an integrated IMO Net Zero Framework have already been introduced by various IMO members. One draft amendment was submitted by the Bahamas, Liberia and co-authored by the International Chamber of Shipping (ICS). Working with the governments of the Bahamas and Liberia, ICS has presented a revised proposal for carbon pricing [2] to "ensure delivery" of IMO's target of achieving net-zero GHG emissions from international shipping by 2050.
The proposal presents an integrated "IMO Net Zero Framework", which can be readily implemented, thereby achieving all the 2023 IMO GHG Strategy's goals. The co-sponsors revise and combine proposals for a simplified goal-based fuel standard and a distinct maritime GHG emissions pricing mechanism.
The draft amendments to MARPOL Annex VI include an initial flat rate GHG fee per tonne of CO2 emitted, (an example given was USD18.75 or USD 60 per tonne of conventional fuel oil), with a feebate (reward) element per tonne of CO2 emissions prevented to incentivize accelerated production and uptake of zero/near-zero GHG fuels, energy sources, and innovative technologies. This would allow, as a by-product, up to about USD 2.5 billion per year to be allocated to an "IMO Net Zero Shipping Fund" to support developing countries.
Elements of the draft amendments to MARPOL Annex VI include the treatment of life cycle emissions (well-to-wake emissions versus tank-to-wake emissions) when calculating the GHG intensity; the avoidance of double-charging by measures adopted by the IMO and regional regulations (e.g. EU ETS and FuelEU Maritime); the preference for an absolute fuel standard (with a maximum permitted GHG intensity of marine fuels); or an option to implement an annual "GHG Surcharge Fee" (GSF) for the CO2 emitted due to under-compliance with the fuel standard, as it is the prevention of CO2 emissions. The draft also includes the option of an energy pooling compliance mechanism for ships and the use of new technologies (e.g. carbon capture).
Will the IMO align its Net Zero Framework with regional regulations?
Without aligning any amendments to MARPOL Annex VI with regional GHG regulations already in force (e.g., the EU ETS Directive and, from 2025 onwards, the FuelEU Maritime Regulation), legislation will become fragmented and challenging for ship owners to comply with. It will therefore be interesting to see what the outcome of the 17th session of the ISGW-GHG and the MEPC 82 will be, especially to what extent the IMO addresses the issue of double charging for GHG emissions, which may be the effect if regional and IMO regulations co-exist and possibly overlap.
[1] https://www.imo.org/en/MediaCentre/HotTopics/Pages/Cutting-GHG-emissions.aspx
[2] https://www.ics-shipping.org/wp-content/uploads/2024/08/ISWG-GHG-17-2-XX-Criteria-to-assess-effectiness-of-IMO-Net-Zero-Framework-ICS.docx