Important work ahead after IMO adopts revised GHG Strategy and life cycle GHG assessment guidelines
It is now clear that the IMO intends to take full lifecycle emissions for marine fuels into account in the revised GHG Strategy adopted at the 80th session of the Marine Environment Protection Committee (MEPC 80).
MEPC 80 also adopted Guidelines on life cycle GHG intensity of marine fuels (LCA guidelines). This was an important step and signal of intent, but the regulatory framework for actually using them still needs to be defined, and the guidelines need further development.
The LCA guidelines allow for a Well-to-Wake calculation, including Well-to-Tank and Tank-to-Wake emission factors, of total GHG emissions related to the production and use of marine fuels. They also define a Fuel Lifecycle Label that specify the information required to assess lifecycle GHG emissions.
MEPC 80 agreed to multiple strands of follow-up work on the LCA framework. There will be a Correspondence Group on the Further Development of the LCA Framework, which has been given a long list of tasks, including further development of default emission factors and sustainability criteria. In addition, the IMO Secretariat has been asked to organise an Expert Workshop on the life cycle GHG intensity of marine fuels, and to conduct a review of existing practices on sustainability aspects/certification and third-party verification issues to be considered further by the planned expert workshop.
A key question is how the LCA Guidelines will be used in the regulations supporting the IMO’s GHG strategy.
Timeline for new GHG regulations
The IMO’s GHG strategy is not a regulation, it is a roadmap. Specific regulatory measures need to be developed, adopted and implemented to realise the vision and ambitions in the strategy.
One of the major tasks still left after MEPC 80 is to finalise and adopt, as soon as possible, the so-called mid-term basket of measures. These should be agreed at MEPC 81, approved at MEPC 83 in the spring of 2025 and adopted later that year at an extraordinary MEPC session, allowing entry into force in 2027.
There is broad support for the mid-term basket of measures to include a goal-based marine fuel standard to regulate the reduction of marine fuel GHG intensity, possibly through a Greenhouse Gas Fuel Standard (GFS). These regulations will be closely linked to the LCA Guidelines.
The IMO’s revised GHG strategy calls for zero or near-zero GHG emission technologies, fuels and/or energy sources to represent at least 5% of the energy used by international shipping by 2030. The GHG intensity standard will be a way to make this 2030 target mandatory and enforceable, and set out higher targets in following years.
Reaching agreement on the exact nature an economic measure, putting a price maritime GHG emissions, will be far more complex as there are multiple proposals. They have many elements in common, but also key differences. While many would like a levy that puts a specific price on CO2 or CO2 equivalents, several countries oppose it. Many have expressed that they are flexible and might accept proposals for a “feebate” or a funding and reward mechanism that would raise funds from GHG emissions, while rewarding ships for cutting GHG emissions. A pricing mechanism could potentially be linked directly to the GHG intensity fuel standard.
Economic measures should also consider the WtW GHG emissions of marine fuels as addressed in LCA Guidelines. Possible synergies of mid-term measures with existing short-term measures such as the Carbon Intensity Indicator (CII) will also be considered.
Development of candidate midterm measure(s) will be top priority at the 16th session of the Intersessional Working Group on the Reduction of GHG Emissions from Ships (ISWG-GHG 16), which is set to meet in April 2024, ahead of MEPC 81.
The second item on the agenda for ISWG-GHG 16 is to further develop the LCA framework on the basis of the areas for further work identified by ISWG-GHG 15, the outcome of the planned expert workshop, and the report of the Correspondence Group established by MEPC 80.
LCA and short-term measures
MARPOL Annex VI states that a review of the short-term GHG reduction measures (EEXI, SEEMP and CII) shall be conducted by 1 January 2026. The review plan covers scope, timeline and data sources.
Within the scope are many important elements, including evaluation of how effective these measures have been in reducing the carbon intensity of international shipping, further amendments to the correction factors and voyage adjustments (CII Guidelines G5); and application of the LCA Guidelines. This work may lead to amendments to existing instruments.
Data will come from the mandatory ship fuel oil consumption data collection system (IMO DCS), but other data may also be used. The data gathering stage will run from MEPC 80 to MEPC 82 (autumn 2024); to be analysed by a working group at MEPC 82 and continued by a correspondence group. The plan to review the short-term GHG reduction measures (EEXI, SEEMP and CII) includes holding an intersessional working group between MEPC 82 and MEPC 83 (spring 2025) as well as a working group at MEPC 83.
Resolution MEPC.352(78) containing CII Guidelines (G1) opens for the possibility for a CO2 emission conversion factor (Cf) to be provided by the fuel oil supplier, supported by documentary evidence. MEPC approved Interim guidance on the use of biofuels under regulations 26, 27 and 28 of MARPOL Annex VI which clarifies how certified sustainable biofuels can be used to improve a ship’s CII rating already from October 2023. These guidelines were developed pending development of policy instruments for the use of IMO’s LCA guidelines.