IMO’s revised GHG strategy taking shape

Final decisions still unknown, but consensus forming on key elements ahead of MEPC 80

Negotiations continued at the IMO last week as the UN body strives to define how quickly greenhouse gases (GHG) from international shipping should be eliminated, and the regulatory tools that should be adopted to achieve it.

The 14th session of the Intersessional Working Group on GHG Emissions (ISWG-GHG 14), meeting from 20 to 24 March, was tasked with further developing the draft revised IMO Strategy on reduction of GHG emissions from ships, and associated policy instruments to ensure the ambitions set out in the strategy are met.

Progress is critical because, in July this year, all eyes will be on the 80th session of the IMO’s Marine Environment Protection Committee (MEPC 80) to adopt a more ambitious GHG strategy than the IMO’s initial GHG Strategy from 2018. The initial strategy calls for a 50% reduction of all GHG emissions from international shipping by 2050 (compared to 2008), and a reduction in the carbon intensity (CO2 emitted per transport work) of 40% by 2030 and 70% by 2050.

The discussions at ISWG-GHG 14 were by no means conclusive, but there appears to be growing consensus around several key elements.

This is what IBIA has observed during last week’s negotiations:

Levels of ambition in the 2023 GHG strategy

There is growing support for a 100% decarbonisation target for 2050 (up from 50% in the 2018 strategy). Discussions are ongoing as to whether that should be “phasing out GHG emissions” from shipping, or achieving “net zero”. Both take full lifecycle emissions (well to wake) into account.

Opinions are more divided regarding whether there should be new and more ambitious targets for 2030. Several want to keep the current ambition to reduce CO2 emissions per transport work by at least 40% by 2030, while some want this to be increased to at least 65%.  There was also a proposal to aim for a 37% reduction of overall GHG emissions from shipping by 2030.

There is some support for requiring a 5% uptake of alternative fuels by 2030 to kick-start the energy transition. However, others want to focus on the energy used by global shipping at this stage.

Several are arguing for an intermediate 2040 overall CO2 emission reduction target to ensure the 2050 target is achieved. Reductions of 50%, 80% and 96% compared to 2008 were discussed for 2040. Others prefer that intermediate targets in 2030 and 2040 should serve as checkpoints towards the 2050 level of ambition.

Policy tools to support the levels of ambition

Referred to referred to at the IMO as a “basket of measures” – there is broad support for these to comprise both economic elements to reduce the price gap between fossil fuels and low-carbon alternatives, and technical elements to promote a gradual decrease of the GHG intensity of marine fuels. There was significant support to include the following elements:

• Phasing in a GHG fuel standard, possibly requiring a 5% uptake of alternative fuels by 2030 in the 2023 revised GHG strategy (see above). It is worth noting that this proposal would help align IMO policies with the European Union’s FuelEU Maritime policy, which now looks set to require ships covered by that regulation to use at least 2% renewable and low carbon fuels from 2025 onwards, increasing to 6% from 2030 onwards, increasing further every five years.
• Policies should be based on full lifecycle emissions (well to wake), supported by the LCA Guidelines developed by the IMO.
• Putting a price on carbon emissions. Most support a flat rate as opposed to a carbon trading system where the price of carbon will fluctuate. Initial proposals range from $50 to $100 per tonne of CO2 emissions. The exact level of such a carbon levy will require further discussion.
• Finding a way to incentivise early movers through some form of rebate or reward (making investments in ships that can use alternative fuels and technologies less risky/more attractive).
• Providing financial and technical support to developing countries, to ensure an equitable and fair transition. Impact on states of any measure needs to be assessed.
• While there is little support for the IMO to make regulations for so-called “Green Corridors”, it could be a means for individual countries to assist in facilitating uptake of alternative fuels, and should be promoted by the IMO.