MEPC 76: Inconclusive talks on bunker fuel carbon tax, R&D levy proposals

The 76th session of the IMO’s Marine Environment Protection Committee (MEPC 76) has adopted a workplan for how to proceed with work on identifying appropriate mid- and long-term measures to put shipping firmly on a path toward carbon neutrality.

The 6-day session, from 10 to 17 June, spent the majority of the available time to discuss potential policy instruments for reducing greenhouse gas emission from international shipping, managing to adopt short term energy efficiency measures but making no progress on two different proposals aimed, respectively, at funding research into low-carbon alternatives and incentivise a move away from fossil fuels.

MEPC 76 had for its consideration a revised proposal for an International Maritime Research and Development Board (IMRD) first out forward by a group of shipping organisations, now with broad support from several IMO member states. The key part of the proposal is a mandatory R&D contribution equivalent to $2 per tonne of fuel oil consumed to fund and accelerate R&D of low and zero-carbon technologies.

The initial proposal was discussed at length during MEPC 75. Although the revised version addressed many of the concerns raised at that time, it soon became clear that it would be impossible to conclude debate on this item at MEPC 76. While several delegations supported the revised R&D proposal, there are also divergent views including concerns regarding allocation of money, governance structure, and associated impact assessments. While the authors of the R&D proposal have been at pains to explain that the $2 mandatory levy is not a market-based measure (MBM), some delegations continued to view it as an MBM and questioned the effectiveness of the proposal in that context. Further discussion was suspended until MEPC 77.

After the curtailed discussion on the R&D proposal, MEPC 76 held initial discussions about an actual MBM, namely the much-publicised proposal for a mandatory levy of $100 per tonne carbon dioxide equivalent on heavy fuel oil from 2025, as a starting point. This is intended to incentivise the move away from business-as-usual fossil fuels to low and zero-carbon alternatives.

Once again discussions showed divergent views on the proposal, with concerns raised about impact on states, the size of the levy, distribution of funds and other elements, but there was also considerable support. Further discussions on the proposals, as well as further submissions on MBMs, have been invited for MEPC 77.

With discussion on the R&D proposal and MBMs proving unconclusive, MEPC 76 turned its attention to agreeing on a work plan, following a number of submissions on how to progress the next stages of IMO’s work to cut GHG emissions from ships between now and the revision of the initial GHG strategy in 2023. 

After long discussions, MEPC 76 adopted a work plan on the concrete way forward to make progress with candidate mid- and long-term measures.

  • Phase I – Collation and initial consideration of proposals for measures (Spring 2021 to spring 2022);
  • Phase II – Assessment and selection of measures(s) to further develop (Spring 2022 to spring 2023); and
  • Phase III – Development of(a) measure(s) to be finalized within (an) agreed target date(s).

The above will entail an enormous work load. Already, hundreds of proposals and commenting documents have been submitted to the IMO on issues related to GHG reduction. Every potential new policy tool must be assessed for the potential impact on states as well as trying to identify the actual emissions reduction potential.

Much of this work will happen between MEPC meetings through intersessional working groups (ISWG-GHG) and correspondence groups, not to mention research and negotiations between Member States and NGOs with consultative status at the IMO.  

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