Shape of things to come!

IBIA’s representative at IMO, Dr Edmund Hughes, looks at the challenges looming this year

To remove the current uncertainty in the market about the next steps for the decarbonisation of international shipping, there is an urgent need for IMO to adopt regulations in 2025 that mandate, from 2027, the further reduction in GHG emissions from ships towards the ‘net-zero’ goal by, or around, 2050.  This is in order to provide the shipping industry, and those that provide services to it, including those of us in the bunker value chain, a framework for future investments and to clearly signal to the fuel producers that there will be a demand, and therefore a return on investment, for producing the sustainable marine fuels needed to meet net-zero by, or around, 2050.

So, what can we expect in 2025 from IMO, and will it go a fair way of removing that uncertainty?  When I worked at the IMO the focus was always on the forthcoming meetings and in particular, for myself and others in the division, the meetings of the Marine Environment Protection Committee (MEPC). We always said that every MEPC there was one, maybe two, big decisions that needed to be finalised at that session.  To say that the forthcoming 83rd session of the MEPC has some big decisions to make is a significant understatement.  Before discussing that further and the possible developments I consider it necessary to recall where we have come from.

In 1997 the International Air Pollution Conference adopted a Protocol to MARPOL that added Annex VI, the international regulations for the prevention of air pollution from ships.  MARPOL Annex VI was revised in 2008, that revision including the global 0.50% sulphur limit for fuel oil (IMO 2020). MARPOL Annex VI continues to be amended to this date and is expected to be the international instrument used to enact the mid-term GHG reduction measures for ships.  These measures have been discussed at length before and to recall the 2023 IMO GHG Strategy envisages those measures will encompass a global GHG intensity marine fuel standard and a maritime GHG emissions pricing mechanism. If these measures are adopted at the extraordinary session of MEPC (MEPC/ES.2) this October, then the earliest they could enter into force would be Spring 2027.

This outcome would be the culmination of 30 years consideration by IMO of the control of GHG emissions from international shipping.  The Air Pollution Conference held in 1997, in addition to adopting MARPOL Annex VI, also adopted resolution 8 on “CO2 emissions from ships” which was the first time IMO’s Member States recognised CO2 as having “an adverse effect on the environment”. 

Then in 2003 IMO’s Assembly adopted its own resolution (A.963(23)) that urged the MEPC “to identify and develop the mechanism or mechanisms needed to achieve the limitation or reduction of GHG emissions from international shipping and, in doing so, to give priority to the evaluation of technical, operational and market-based solutions”.

The road from 2003 to where we are today has not been easy to say the least!  In 2013 the deliberations of MEPC on the development of GHG reduction measures were suspended as, at the time, no consensus on a way forward was forthcoming despite extensive groundwork by an expert group.  In some respect, this reflected the state of relations between Member States following the adoption of the Energy Efficiency Design Index (EEDI) and Ship Energy Efficiency Management Plan (SEEMP) by a vote in 2011.  That experience left several mental scars, not least with the IMO Secretariat, and it was not really until the Paris Agreement was made in 2015 did a way forward become apparent and, building on the data collection system for fuel oil consumption of ships adopted in 2016, enabled Member States to begin to work on what became the Initial IMO GHG Strategy adopted in 2018. 

As things stand February’s intersessional meeting of the Working Group on Reduction of GHG emissions from ships (ISWG-GHG 18) will be considering 25 submissions of which several are proposing amendments to the draft regulatory text prepared at MEPC 82 last October for a new Chapter 5 ‘IMO Net-Zero Framework’ of MARPOL Annex VI.  Other issues under consideration include the development of a sustainable marine fuels certification framework so that IMO can recognise bodies issuing ‘proof of sustainability’ certificates.

The text developed by MEPC 82 was a consolidation of several proposals for mid-term GHG reduction measures with a view that the technical measure – the global GHG fuel standard – had greater “convergence”. At the time the text for the GHG levy/fund proposal was considered more just a consolidation of proposals. However, a revised proposal for a universal GHG levy/contribution per tonne of CO2 emitted paid into a fund, used both to support those using zero or very low carbon fuels and developing countries with the transition, that has garnered nearly 50 Member State co-sponsors has now been tabled and arguably sees significant convergence among those proponents.

What it tells you though is that to achieve a compromise – and the all-important “consensus” so that the amendments can be approved at MEPC 83 for circulation (a six month circulation period is a legal requirement) prior to adoption at MEPC/ES.2 – will require those Member States opposing the imposition of a universal levy on international shipping that supports a fund to move their position.  It may sound difficult – it is – but it is not impossible and the great thing about the long process of reaching agreement is that it provides time for new ideas and nuances to be identified that can bridge the gaps to the satisfaction of all. 

At this critical time, we are fortunate to have a highly experienced chair of the working group developing these regulations and an IMO Secretary-General who has outstanding communication skills. Both need the full support of the IMO membership.

IBIA will be doing its utmost to assist them although as many of the issues are highly political it will be the role of the governments that will be key. Most importantly at this stage is to keep everyone in the room and moving forward.

On this point – and is something I have been asked about – the decision of President Trump to withdraw the US from the Paris Agreement may see the US participate in the negotiations but ultimately reserve their position on any measures that IMO choses to adopt – as they did with the Initial IMO GHG Strategy during his last term.  How this impacts the implementation of any adopted measures would remain to be seen, for example, would the USCG enforce them for international trading ships entering US ports/waters? But the measures would not come into force until 2027 and there is always the prospect of a new US administration following a different policy from 2029.

The reason for the extensive history lesson in this article is to identify that international negotiations and the development of binding mandatory instruments is extremely difficult and anyone telling you the outcome of the IMO’s negotiations this year is a done deal is misguided.  MEPC 83 will see one major decision, and by initiating the energy transition for international shipping, it may be one of the most significant in the history of modern shipping.

In the short term it is likely that the uncertainty I spoke of at the beginning may continue to prevail, at least for another six months.

Wishing you all a fair wind and safe seas.

Edmund Hughes

edmund.hughes@ibia.net