Background
The IMO’s recent Marine Environmental Protection Committee meeting (MEPC 78) was held June 6th thru 10th, 2022. Prior to this meeting there were two preparatory meetings of the Intersessional Working Group on the Reduction of GHG Emission from Ships: ISWG-GHG 11 (March 14-18); ISWG-GHG- 12 (May 16-12).
Due to the limited time to debate technical issues at the full MEPC meeting, these Working Group Meetings have been instrumental in recent years to arrive at a majority consensus on a number of controversial issues, keeping the MEPC roughly close to schedule. In recent meetings, the MEPC has generally endorsed and formalized the recommendations from this Working Group.
Executive Summary
MEPC 78 was not a key decision-making session. However, progress was made on the following GHG issues to be finalized at future sessions:
Short-term GHG Reduction Measures
As recommended by the ISWG-GHG meetings, the guidelines for EEXI, CII, SEEMP, and DCS were adopted by MEPC as proposed, including the “procedures for in-service performance measurement" for the EEXI calculations. Correction factors for heavy weather and port time were discussed but not included at this time and are to be revisited following feedback on the implementation of CII.
Marine Fuel Life Cycle GHG Analysis
The work at the ISWG-GHG on the LCA guidelines was noted and the Committee agreed that this work should be completed as a matter of priority. A new Correspondence Groupe was established to further consider this at MEPC 79 in anticipation of finalizing the guidelines at MEPC 80. The guidelines should be consistent, scientific, rigorous, measure-neutral, and based on an agreed approach. Although the LCA Guidelines are to be crafted based on Well-to-Wake fuel factors and neutral, without specific use of regulation in mind, it is generally recognized that they would likely become the basis for the assessment of all current and future fuels, including bio-, e-, fossil-based fuels, and onboard carbon capture for all IMO GHG regulations, potentially including updates to the current EEDI, EEXI, and CII, as well as future mid-and long-term GHG measures.
Mid-term and Long-term Measures
There was a general review and conceptual endorsement of a "basket" of packages including market-based measures, carbon levies, cap-and-trade systems, economic incentives, and regulatory (EEDI Phase IV) measures. These measures will need to be developed in line with the revised IMO strategy and goals.
Revision of the Initial IMO GHG Strategy
Recent UN conferences (COP 26) have suggested that the initial strategy of a 50% reduction of GHG compared to 2008 levels should be reconsidered since it does not adequately address the Paris Agreement temperature goals and that a higher level of ambition should be adopted for the GHG strategy. MEPC 77 agreed to revisit this issue and the discussion continued at MEPC 78. There was significant support for a revised goal of zero, or net-zero GHG emissions by 2050, along with a reconsideration of 2030 and 2040 intermediate goals. Some countries expressed concern about developing countries like China and India, which are not fully on board, and for SIDS (Small Island Developing States), and LDCs (Less Developed Countries). It was agreed to continue the discussion at MEPC 79 in anticipation of finalizing the strategy revision at MEPC 80.
Herbert Engineering Comments:
MEPC 78, as anticipated, was not a key decision-making session. While there was discussion and progress on multiple issues, the IMO faces deadlines for future sessions, mainly MEPC 80 in July 2023. In particular, the IMO needs to find compromise and resolution in the following complex areas:
• Revision of the Initial IMO GHG Strategy – While there might be an emerging consensus on the net-zero target for 2050, the details on how to make a “fair, just, and equitable” transition show deep divides. In particular, resolving the seemingly incompatible UN principal in the Paris Agreement of CBDR (common but differentiated responsibilities) with the founding IMO principal of NMFT (no more favorable treatment). Additionally, some of the developing countries specifically India and China, seemed opposed to the zero 2050 goal. Even with consensus on 2050 levels, there is still the question of how to set the intermediate 2030 and 2040 goals which will impact the short-term CII reduction factors beyond 2026, as well as the mid-term measures.
• Mid-term and Long-Term Measures – Most agree that financial instruments will be required in order to provide incentives for meeting the IMO targets and for the adoption of low- and zero-carbon fuels and technologies. Will the "carrot" of subsidies, the "stick" of a carbon emission tax, or a combination like “cap-and-trade” be preferred? How do we make it fair, equitable, and international? How can it be applied to Well-to-Wake rated fuels, where the GHG emissions (or credits) might not be associated with maritime transportation? These are all difficult issues that need to be resolved.
Despite all the uncertainty, one thing is clear:
GHG regulations will affect every ship owner and operator. Do you want to make minimum adjustments year after year chasing the regulations mark, or do you want to make significant changes to get ahead of regulations and set leadership standards while leveraging opportunities for new technologies inclusion? HEC is here to advise you of your best paths forward. Evaluations are derived by monitoring annual speed and schedule adjustments through full future-fuel repowering.