IMO / Regulatory Matters – December 2024

Our regulatory round-up by IBIA’s representative at IMO, Edmund Hughes

In the last edition of World Bunkering I highlighted that the time was getting nearer for a decision on regulatory measures that will be key to delivering the IMO’s mid-century net-zero GHG emission goal for shipping and argued that there remained many questions still needing to be answered.

The 82nd session of the Marine Environment Protection Committee (MEPC 82) held from 30 September to 4 October 2024 was the latest milestone meeting for an opportunity to provide some of those answers.  Whilst MEPC 82 was indeed dominated by discussion of the mid-term GHG reduction measures, and a more consolidated version was tabled of possible draft amendments to MARPOL Annex VI setting out a new Chapter 5 on ‘Regulations on the IMO net-zero framework’, significant policy issues remain to be resolved.

Some progress was made not least that there now appears to be general agreement that any ‘technical element’ will be a global standard for GHG intensity of marine fuel for which compliance would be demonstrated over a calendar year.   However, it is increasingly recognised that fuels are unlikely to be available globally to comply with the requirements, especially in the short term, and so some sort of ‘flexible compliance mechanism’ would be required to ensure international shipping could continue without significant disruption.  Such mechanisms could consist of trading surplus units (accrued where a ship has over complied), pooling with other ships to achieve compliance across several ships, and/or use of a surcharge fee to be paid where a ship does not comply. 

Specifically for any measure that deploys a trading system there would be a need to establish an international register (at IMO?) and a decision made on who should be responsible for any residual funds that may be raised from the selling of surplus units?   You can see from this explanation that the policy issues around an ‘economic element’ begin to seep into the deliberations on the technical measure and vice versa.  Indeed, one of the key policy issues that is yet to be reconciled is whether the ‘maritime GHG emissions pricing mechanism’ will be integral to the global fuel standard or distinct i.e. a standalone ‘levy’ or ‘contribution’.

Finally, and most significantly, how and for what purposes should any residual funds be used? Many countries and shipping industry bodies advocate the imperative that funds are used to incentivise the uptake of the green fuels, technologies and energy sources that are needed to achieve the goals. However, disbursement of funds is the most political aspect of the discussions and a matter that was amplified with the findings of IMO’s Comprehensive Impact Assessment (CIA). The CIA found that the IMO measures, if not mitigated in some way, would in effect make the poorest countries poorer due to increased cost of maritime transport. Frankly, it would be problematic for the IMO as a United Nations body, albeit with responsibility for shipping regulation alone, to take a decision that resulted in economically disadvantaged nations becoming more so. Several developing countries also raised concerns over food security and so again the political sensitivity of any final package of measures is apparent.

So now the focus turns to intersessional work including the holding of two intersessional meetings – one next February and one in the week preceding MEPC 83 in April. The timeline agreed under the 2023 IMO GHG Strategy seeks regulatory amendments being approved at MEPC 83 next April with adoption of the amendments at an extraordinary session of MEPC in October 2025.

Carbon Intensity Indicator (CII) for bunker vessels

IBIA submitted a document (MEPC 82/6/5), and there was one from INTERTANKO highlighting a similar concern, identifying the significant challenge for bunker vessels to comply with CII. These documents were considered by the working group established during MEPC 82. To avoid a risk of bunker vessels being considered as a separate ship type (and potentially forgotten about!) it was ensured that in the work going forward IBIA’s submission and proposal for a short-voyage (duration) correction factor has been included as part of the general problem for all ships undertaking short voyages which, along with port idle time, have been identified as the most significant issues needing to be addressed.

However, following a submission by the EU that proposed a two-phase approach to the review of short term measures it is evident that the review will not now be completed by 1 January 2026, as set out in MARPOL Annex VI.  In the development of which issues should be considered in phase 1 and phase 2 of the review Member States seem to wish to prioritise strengthening the CII rather than addressing the implementation problems.  Currently there are only two items in the work plan that definitely need to be considered in phase 1, that is, strengthening the CII Z reduction factors for 2027-30 and considering linking CII with SEEMP.

Furthermore, and this again raised concerns, several Member States suggested postponing the previously agreed holding of an intersessional meeting to after MEPC 83 potentially leaving all the work on correction factors, etc. to after MEPC 83. That suggestion was rejected and a compromise was reached to permit a three day meeting before MEPC 83 but it still highlights how the whole GHG regulatory agenda is being acutely squeezed.  As now recorded in the report of the working group if there is a decision to make amendments to any instruments e.g. G5 Guidelines on CII correction factors and adjustments, then the implication of delaying such work to after MEPC 83 would mean the adoption by the Committee of additional new or amended instruments could not take place until MEPC 84 in Spring 2026.

Emission factors for environmental risk assessments for discharge water from Exhaust Gas Cleaning Systems

IBIA’s submission MEPC 82/5/1, commenting on document MEPC 79/9/3 (Germany), had emphasised that the data set used in the study referred to in document MEPC 79/9/3 did not provide a suitable and sufficient basis for the development of representative emission factors for the environmental risk assessment of discharge water from Exhaust Gas Cleaning Systems (EGCS); and had provided recommendations on how to develop representative emission factors based on a large data set of samples of discharge water.  This document, along with another by ICS and CLIA (MEPC 82/5/3), that proposed draft terms of reference for the re-establishment of the UN’s Group of Experts on the Scientific Aspects of Marine Environmental Protection (GESAMP) Task Team on EGCS to conduct further work on emission factors, were forwarded to the working group established by the Committee.

During the deliberations of the group, IBIA’s suggestion was identified, that is, the terms of reference of the GESAMP Task Team on EGCS should take into account the following aspects for the determination of emission factors: source data, standard methods, detection limits and flow rates. Due to time constraints, the group recommended that the Committee refer the draft terms of reference for the re-establishment of the GESAMP Task Team on EGCS to PPR 12 (January 2025) for further consideration with a view to finalisation and advising the Committee accordingly. It was noted that although PPR 12 might finalise its terms of reference, the GESAMP Task Team on EGCS would only be formally established after MEPC 83 (April 2025) and likely report to PPR 13 in Winter 2026. 

New Emission Control

Areas designated

MEPC 82 agreed to adopt amendments to MARPOL Annex VI, designating the Canadian Arctic and Norwegian Sea as emission control areas (ECAs) for nitrogen oxides, sulphur oxides, and particulate matter. These ECAs are due to enter into force on 1 March 2026.

Sustainable fuels certification framework

The intersessional meeting considered document ISWG-GHG 17/3/1 (Brazil et al.), proposing how to develop a certification framework facilitating the implementation of the IMO Life Cycle Assessment of Marine Fuels (LCA) Guidelines and the IMO net-zero framework; basing the proposal on key elements consisting of inserting references to certification schemes in MARPOL Annex VI, developing a new set of guidelines providing guidance on the criteria and procedures for recognition of certifications schemes and updating existing IMO guidelines to ensure consistency; and proposing a way forward to obtain technical and scientific guidance in view of developing the content of the proposed new set of guidelines based on the draft outlines provided in its annexes.

This document received wide support and MEPC 82 invited interested Member States and international organisations to continue to work together on the development of a sustainable fuels’ certification framework, including draft guidelines, with a view to submitting a more developed proposal to a future session.  IBIA has informed the coordinators of this further work (Brazil and RINA) that it would like to participate in the development of the proposal.

Furthermore MEPC 82 invited interested Member States and international organisations to submit concrete proposals on how to reference certification schemes and the fuel lifecycle label (FLL) in the draft legal text of the IMO net-zero framework and associated guidelines to a future session.

Reporting of fuels data to IMO

During MEPC 82 the observer from IMarEST informed the Committee that, according to their analysis by comparing IMO sulphur monitoring data (MEPC 82/INF.2) and the IMO Fuel Oil Consumption Data Collection System (DCS) data sets (MEPC 82/6/38), the proportion of HFO used by international shipping might be over-reported in the IMO DCS. IMarEST informed the Committee that they would submit detailed information and proposals to improve the accuracy of reporting to a future session.

Use of ammonia and hydrogen as fuel

Draft interim guidelines for safe use of ammonia as fuel were finalised by the Sub-Committee on Carriage of Cargoes (CCC 10) in September and are expected to be approved by IMO’s Maritime Safety Committee (MSC 109) in December. Draft interim guidelines for use of hydrogen as fuel require further work and are expected to be finalised next year and approved in 2026.

Consideration of carriage of greater than B25 biofuels by bunker vessels

MEPC 81 in March 2024 forwarded the issue of the carriage of greater than B25 biofuels by MARPOL Annex I certified bunker vessels for supply of fuel oil to ships to the IMO Working Group on Evaluation of Safety and Pollution Hazards (ESPH 30) held 14 to 18 October, for further consideration and with a view to advising MEPC on a way forward.

ESPH 30, having considered a submission from the Republic of Korea proposing the approval of interim guidance and a submission from IBIA providing further information, gave general support for draft interim guidance permitting the carriage of up to B30 biofuels on Annex I bunker tankers. This draft will now go forward to PPR 12 in January 2025 with a request for the Sub-Committee to concur with the group’s view and PPR is expected to then forward the draft to MEPC 83 in April 2025 for approval.

Wishing a fair wind and safe seas to all.

Edmund Hughes

edmund.hughes@ibia.net