The Upcoming Debate on GHG Regulations and Economic Measures at the IMO: WSC identifies Opportunities for Improvement and Agreement
Washington/Brussels/Singapore, August 25, 2022 – Having concluded on short-term climate measures at IMO MEPC 78, member nations and organisations have turned their full attention to developing the mid-term measures necessary to progress the decarbonisation of shipping. In a recent paper to IMO ISWG-GHG 13 and MEPC 79, the World Shipping Council (WSC) examines the current proposals, highlighting three key suggestions to support swift progress and ensure that regulations are effective in driving the transition to alternative fuels and propulsion technologies in line with global climate goals.
“This is the time for open-minded discussions and a shared focus around what is needed for our climate and the sustainability of global supply chains. We have to think practically about what the proposals before the IMO can deliver in actual carbon emission reductions and also how to get to a decision. It is not just about getting to yes, but getting to yes on something that will make a difference for the future of our planet,” says John Butler, President & CEO of WSC.
The WSC paper MEPC 79/7 examines the main mid-term measures under deliberation, identifies cross-cutting issues relevant to numerous proposals, and proposes three key suggestions for consideration by member nations at IMO ISWG-GHG 13 and MEPC 79.
Common challenges
Current proposals before the IMO address different components of what WSC regards as Six Critical Pathways which need to be considered to decarbonise the industry in line with global climate targets. The current proposals include a GHG levy or feebate mechanism, a GHG fuel standard, emissions trading, and a funding/reward system tied to a specific benchmark. They all have their strengths, but share a set of challenges that are critical to the overall viability and success of IMO’s GHG Strategy:
IMO’s goal to phase out GHG emissions from shipping will require very significant investments in the production and supply of low, near-zero, and zero GHG fuels.
Well-to-Wake Life-Cycle Analysis (LCA) is critical to avoid favouring fuels that have attractive Tank-to-Wake figures, but produce high life-cycle emissions instead of GHG reductions.
Countries across the globe face very different economic circumstances and some locations – especially those that are remote and import or export small volumes – already face very high transportation costs. Any proposal needs to identify an effective structure to address these issues of equity and sustainability of island states and developing economies.
Simplicity of implementation and the ability to verify and enforce standards.
A way forward
To address the above challenges and enable swift progress at IMO ISWG-GHG 13 and MEPC 79, WSC offers three suggestions that would significantly strengthen the IMO GHG Strategy.
Modify the Global Fuel Standard (GFS) proposal to include fewer steps and to establish dates for each step based on projected fuel and technology production timeframes for those fuels that will enable significant GHG reductions based on Well-to-Wake LCA analysis. This will encourage earlier investment in the production of low and near-zero GHG fuels, increase R&D towards more significant technology advances, and reduce the risk of the regulation stalling investments based on incremental change.
Develop an IMO Green Corridors Programme as a means to introduce new fuels and technologies and as a practical and explicit vehicle for an equitable transition. Building on existing initiatives, Green Corridors can be created to connect both developed and developing economies with the introduction of appropriate ships and fuel infrastructure serving specific routes with a graduated expansion.
Consider a benchmarking approach using an LCA-based GHG intensity metric that is more directly tied to meeting GHG reduction goals, rather than a relative benchmark based on the CII.
“Our core challenge is to create the regulatory structure to drive development, production, and adoption of low and near-zero GHG fuels and technologies, coupled with the necessary investments in renewable energy production for an equitable transition. Liner shipping is investing in decarbonisation, and we urge IMO member nations to come together with a focus on future generations to ensure the advancements necessary for a timely energy transition,” says John Butler.
Learn more
To learn more about the state of play at the IMO on GHG regulation and the liner shipping perspective on the next steps to accelerate the transition, WSC held a webinar on “Next steps on the path towards shipping decarbonisation” on Thursday September 8, 2022 at 13:00 CET/19:00 SST/07:00 EST.
View the webinar and download the presentations here.
Download the WSC paper MEPC 79/7