Greenhouse gas regulations: What are the IMO’s next steps?

TThe comprehensive strategy for climate neutrality in shipping adopted by the International Maritime Organization (IMO), with a focus on reducing greenhouse gas emissions, aims to reduce greenhouse gas emissions from international shipping and phase them out as soon as possible.

IMO targets

Concrete targets include reducing carbon intensity (CO2 emissions per transport performance) by at least 40% by 2030 compared to 2008 carbon intensity levels and ensuring that at least 5% of the energy consumed by international shipping comes from technologies, fuels and energy sources that cause zero or almost zero greenhouse gas emissions.

The objective is to reduce greenhouse gas emissions by at least 70% by 2040 and to achieve net-zero greenhouse gas emissions by 2050 (1).

These goals will be achieved through technological innovations that promote the development and global deployment of alternative fuels and energy sources, while strengthening capacities to support developing countries and ensuring that no one is left behind.

At the 81st session of the Marine Environment Protection Committee (MEPC 81) earlier this year, significant progress was made on regulatory frameworks and policies to improve energy efficiency, manage marine fuels and reduce greenhouse gas emissions.

Before the MEPC 82

In addition to the progress on the legal framework, the MEPC agreed on the following steps ahead of its next meeting (MEPC 82), scheduled to take place from 30 September to 4 October 2024.
A few days before MEPC 82, the 17th interim meeting of the Working Group on Reducing Greenhouse Gas Emissions from Ships (ISWG-GHG) will take place in London from 23 to 27 September 2024. The group’s report will be presented to MEPC 82 at the subsequent meeting.

Several IMO members have already submitted several draft amendments to MARPOL Annex VI for an integrated IMO net-zero framework. One draft amendment was submitted by the Bahamas and Liberia and co-authored by the International Chamber of Shipping (ICS). In collaboration with the governments of the Bahamas and Liberia, the ICS has submitted a revised proposal for carbon pricing (2) to ensure ‘delivery’ of the IMO objective of achieving net-zero greenhouse gas emissions from international shipping by 2050.

The proposal represents an integrated IMO Net Zero Framework that can be easily implemented and will achieve all the objectives of the IMO Greenhouse Gas Strategy 2023. The co-signatories are revising and combining proposals for a simplified target-based fuel standard and a clear pricing mechanism for maritime greenhouse gas emissions.

The draft amendment to MARPOL Annex VI proposes an initial flat-rate greenhouse gas charge per tonne of CO2 emitted (an example is USD 18.75 or USD 60 per tonne of conventional fuel oil) and a rebate (reward) per tonne of CO2 emissions avoided to encourage accelerated production and use of zero/nearly zero greenhouse gas fuels, energy sources and innovative technologies. This would allow, as a side effect, up to USD 2.5 billion per year to be allocated to an IMO Net Zero Shipping Fund to support developing countries.

Elements of the draft amendment to MARPOL Annex VI include the consideration of life-cycle emissions (well-to-wake emissions versus tank-to-wake emissions) when calculating greenhouse gas intensity; avoiding double burdening of IMO measures and regional regulations (e.g. EU ETS and FuelEU Maritime); preference for an absolute fuel standard (with a maximum permissible greenhouse gas intensity of marine fuels); or an option to introduce an annual ‘GHG Surcharge Fee’ (GSF) for the CO2 emitted due to non-compliance with the fuel standard, as this serves to avoid 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 adapt its Net Zero framework to regional regulations?

Unless changes to MARPOL Annex VI are brought into line with regional greenhouse gas regulations already in place (e.g. the EU ETS Directive and from 2025 the FuelEU Ship Regulation), the legislation will become fragmented and difficult for shipowners to comply with. It will therefore be interesting to see what the outcome of the 17th session of the ISGW-GHG and MEPC 82 will be, in particular to what extent the IMO addresses the issue of double charging for greenhouse gas emissions, which could be the consequence when regional and IMO regulations co-exist and potentially overlap.
Source: Skuld