Background
The IMO’s most recent Marine Environmental Protection Committee meeting (MEPC 79) was held on 12-16 December 2022. Prior to this meeting, there was the preparatory meeting of the Intersessional Working Group on the Reduction of GHG Emission from Ships (ISWG-GHG 13) on 5-9 December 2022.
Executive Summary
No major decisions were made regarding GHG issues, but progress was made on the following to be finalized at MEPC 80 in July of 2023 and future sessions:
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 & 79. There was significant support for a revised goal of zero, or net zero, GHG emissions for 2050, along with a reconsideration of 2030 and 2040 intermediate goals. But some countries expressed concerns about SIDS (Small Island Developing States) and LDC’s (Less Developed Countries), and some developing countries like China and India are not fully on board. It was agreed to continue the discussion at ISWG-GHG 14 (March 2023) & ISWG-GHG 15 (June 2023) in anticipation of finalizing the strategy revision at MEPC 80 in July 2023.
Short-term GHG Reduction Measures
There was general discussion and support for the implementation of further phases of the energy efficiency design index (EEDI) for new ships. For existing ships, there was general discussion regarding setting the Carbon Intensity Indicator in the years beyond 2026, with general support for reduced levels of 6% – 7 % annually, again with anticipation of finalizing these items, including any corrections and adjustments, at MEPC 80
Marine Fuel Life Cycle GHG Analysis
At MEPC 78 a new Correspondence Group was established to development of draft guidelines on the lifecycle GHG intensity of marine fuels (LCA Guidelines). The interim report from the group was reviewed at MEPC 79 and the group was instructed to continue this effort in anticipation of finalizing the guidelines at MEPC 80. 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 for 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 continued discussion 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.
Herbert Engineering Comments
MEPC 79, 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, and specifically for the upcoming MEPC 80 session in July 2023. In particular, the IMO needs to find compromise and resolution in the following very difficult and contentions areas:
Revision of the Initial IMO GHG Strategy – While there might be an emerging consensus on the net zero targets for 2050, the details on how to make a “fair, just, and equitable” transition show deep divides. In particular, how to resolve 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). Also, 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. It is also unclear when and how Life Cycle Well-to-Wake fuel factors will be implemented.
Mid-term and Long-Term Measures – Most countries agree that financial instruments will be required in order to provide incentives for meeting the IMO targets and for the rapid adoption of low- and zero-carbon fuels and technologies. Will the ‘carrot’ of subsidies, the ‘stick’ of carbon emission taxes, or some combination like “cap-and-trade” be preferred? How to make it fair, equitable, & international? And 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 are coming that will affect every ship owner and operator. You have the choice of making the minimum adjustments year to year to stay within the regulations or making significant changes to get ahead of the regulations. HEC is here to advise and help evaluate whichever path you choose, depending on the individual ship’s capacity, speed, age, and operating profile. Practical solutions from monitoring and annual adjustments of speeds and schedules, to full future-fuel repowering, can be evaluated.
