New course for emissions reductions

The IMO published its initial greenhouse gas strategy in 2018, which contained a 2050 target of 50% reduction of the total annual greenhouse gas (GHG) emissions compared to 2008, while pursuing efforts to phase them out as soon as possible this century. This objective gave the industry a clear indication of where the IMO was heading in terms of emissions reductions. But, as IMO’s Roel Hoenders explains things have changed significantly since 2018.“So much has happened in climate politics and with the initiatives launched all around the world by the wider industry, all this activity, combined with the latest discussions at COP26, means we can expect a significant strengthening of our GHG strategy.”

“We can expect a significant strengthening of the level of ambition in the IMO greenhouse gas strategy.”

Work is already underway on the new strategy and Roel confirms that IMO has received concrete proposals from Member States, the shipping industry and from environmental NGOs who are all involved in the negotiation process. “When you look at what’s happening in the industry and at the level of ambition of certain governments, I think the course of action is clear, we are moving towards zero emissions or decarbonisation of the industry around 2050. There is a lot to do, and a lot is happening and there are still questions to be answered, about the target year and about what decarbonisation exactly means in a shipping context, whether the target should cover all greenhouse gases or primarily focus on CO₂ - all of which will depend on where we head with our negotiations. But, overall I think everybody is convinced within the IMO context that decarbonisation is our end goal, and our regulatory framework will facilitate that”.

"I think we have received all the ingredients from governments, industry and the NGOs and we need to cook them together and produce a revised strategy, which we will adopt at MEPC 80* in spring 2023."

So, just how does IMO plan to turn these ambitions into a revised strategy? “I think setting out the targets, and the levels of ambitions for 2050 and possible intermediate years and then translating those strategic goals into binding measures will be key to success. The good news is that’s really a key strength of IMO - we not only talk about strategies but also transpose them into mandatory regulatory requirements for the shipping industry. You have to understand that IMO is not an industry collective, it is a UN body that is a collective of 175 member governments. So, just like the discussions in the United Nations Framework Convention on Climate Change (UNFCCC) on general climate politics, we have an obligation to make sure that the regulatory framework that we are going to put in place will not deepen the divide between developed and developing countries particularly when it comes to a global problem like climate change.”

Developing a framework that applies to all

In Roel’s view, the key here is to ensure there will be opportunities in the industry decarbonisation process for everyone who is part of the negotiations within the IMO. “It is important that developing countries continue to have access to affordable transport services to ensure their exports reach the global markets and have equal opportunities in creating jobs in low-carbon shipping for future generations. At the same time, small island developing states in the Pacific need to have access to affordable maritime transport for imports of essential goods. On the other side of the equation, we already see parts of the industry that want and can move faster than others and we must give that space within the regulatory framework. However, we must be conscious of those that will have difficulty in moving at the same pace because of lack of access to zero carbon fuels or because vessels are employed on routes where profits are lower. We have a lot of experience with differentiation already in MARPOL Annex 6 where, for example, we have embedded emission control areas to allow certain regions to go beyond the current fuel standards. In addition, we have different energy efficiency requirements today for different ship types and even within the same ship types based on size. It will take some time to make sure all these various interests are reflected in the regulatory framework but, we have a good track record. We will make sure that when we revise the strategy and develop concrete midterm measures, including market-based measures, we have a legal framework that applies to all, but also has the possibility of a differentiated approach that reflects IMO’s global membership.”

Because IMO regulations are technology neutral this encourages broad technology development on the route to decarbonisation and leaves it up to the operators and owners to decide what fuel and technology to use. What this means for the wider industry is increased complexity – more engine types, more fuels to be stored and more lubricants in use - and new additive systems will be needed to help ensure trouble free operation.

“It’s clear that in the future the fuel or energy source used for propulsion will look very different from today and there will be a larger variety of fuels in the market.”

While IMO is technology neutral, it has adopted the theme of ‘New technologies for greener shipping’ as the World Maritime theme in 2022. It says this is an opportunity to focus on the importance of a sustainable maritime sector and the need to build back better and greener in a post-pandemic world. “What we are really looking at is how we can enter the new generation of ships that are energy efficient, have a low environmental impact, have a very good safety record and use the most recent digital innovations. And that’s what we are trying to pursue with our regulatory framework. This theme helps to put the emphasis on innovation and encourages those front runners in the industry, be it R&D organisations, classification societies or ship owners or builders, to bring their information to the IMO so that we can share it among our entire membership.”

When the new GHG strategy is implemented by means of binding regulations it will have far reaching implications for ship manufacturers, operators and the wider marine industry. Its successful policing will be a key to ensuring a global level playing field is preserved. With more than 97% of the global fleet sailing under a flag of a nation that has ratified MARPOL Annex 6, Roel says the traditional port and flag state control built into the IMO framework as an enforcement mechanism works very well. “It is each nation’s job to enforce the rules that they have helped to create and agreed to. I do think the move towards new regulatory mechanisms, such as the amendments that we adopted last year on the Energy Efficiency Existing Ship Index (EEXI) and Carbon Intensity Indicator (CII), where we now have a rating system, will really help.”

CII enters into force on 1 November 2022, and Roel explains how the system is going to work. “Fuel consumption will be recorded over 2023 to form a base on which CII will be calculated. Ships will then get an A to E energy efficiency rating. Ships rated for three consecutive years as D or one year as E will have an obligation, embedded in the current framework, to adopt a plan of corrective actions to improve their energy efficiency performance and bring them back to a C rating. Ships will not be forced to stop operating if they are poorly rated - an active choice of the member states to allow time to gain experience with how the CII framework works in practice for individual ships.”

“We have seen a lot of interest in the rating system from other stakeholders, beyond the traditional enforcement agencies. I think this is going to be a good way to get more people aware of IMO activities. Rather than talking about very complex measures the simple A to E rating - just like on a fridge or a car - makes the whole thing easier to understand. We can already see that, for example, banks, insurers, charterers and port authorities are looking at the information to provide incentives to the most energy efficient ships or to report to their shareholders and customers as part of their efforts to decarbonise their overall supply chain.”

“Stakeholder actions based on CII ratings may provide strong enforcement tools and complement the traditional mechanisms because they involve the wider value chain.”

“In the wider world we are seeing big, well-known multinationals such as IKEA, Nike, Amazon for example, increasingly looking to reduce their carbon footprint across the entire supply chain. Because of their high visibility their net-zero commitments are of general media interest and their operations come under closer scrutiny. This is likely to put pressure on the shipping segment to decarbonise – particularly as consumers look deeper into the green credentials of their suppliers.”

Clearly the decarbonisation of the global shipping industry will not be possible without significant investment although Roel is reluctant to put a figure just yet on what he thinks it will mean for end consumers. “Overall, there is a societal expectation that we decarbonise, but how the costs will be spread is a bit more of a difficult discussion. IMO will soon have that discussion when we will develop additional GHG reduction measures, including market-based measures. Had we decarbonised earlier we would not see the increase in energy prices that we are seeing today being driven solely by fossil fuel prices – and the longer we wait, the higher the costs are likely to be for society as a whole. In that sense I think it’s key that as the UN’s global regulator we put this decarbonisation process in motion now.”

* MEPC80 is the 80^th session of the Marine Environmental Protection Committee

Download this article