The International Maritime Organization (IMO) recently concluded its 83rd session of the Marine Environment Protection Committee (MEPC 83), where it endorsed a new regulatory package aimed at reducing greenhouse gas (GHG) emissions from international shipping. While the framework is seen as a step forward in climate policy, it has sparked mixed reactions within the maritime industry.
The new GHG fuel intensity requirement will take effect from January 1, 2028.
Ships over 5,000 gross tons will be required to report their annual GHG Fuel Intensity (GFI).
The framework introduces two compliance targets: a Base target and a Direct compliance target.
Ships failing to meet the Direct compliance target must offset their emissions through surplus units or remedial units.
Concerns have been raised about the potential for incentivizing inefficiency among compliant ships.
Overview of the New Framework
The IMO’s Net-Zero Framework aims to significantly reduce GHG emissions from ships by implementing a GHG fuel intensity requirement. This regulation will apply to vessels of 5,000 gross tons and above, with certain exemptions for domestic-only traders and offshore platforms.
Each ship will need to calculate and report its GHG Fuel Intensity, which includes all energy sources used onboard, such as marine fuel, electricity, and renewable energy. The framework sets two compliance thresholds:
Base Target: A minimum standard for emissions reduction.
Direct Compliance Target: A more stringent requirement that mandates year-on-year reductions until 2035.
Compliance and Offsetting Mechanisms
Vessels that do not meet the Direct compliance target will be required to offset their emissions. This can be achieved by purchasing surplus units (SUs) from better-performing ships or acquiring remedial units (RUs) from the newly established IMO Net-Zero Fund. The initial pricing for RUs is set at:
$100 per tonne CO2 equivalent for Tier 1 emissions.
$380 per tonne for Tier 2 emissions.
Industry Reactions
The response to the new framework has been mixed. While IMO Secretary-General Arsenio Dominguez hailed the package as a significant achievement, industry stakeholders have expressed concerns about the negotiation process and excluding non-governmental organizations from discussions.
Tim Wilkins, managing director of INTERTANKO, emphasized the need for the IMO to incorporate industry insights into future regulatory discussions. He noted that implementing the framework will require extensive guidelines and collaboration with industry experts to ensure effective GHG reductions.
Potential Issues with the Framework
Critics have pointed out that the new framework may inadvertently encourage inefficiency. Ships that fall below the Direct compliance target might find it more profitable to burn more fuel to generate surplus credits, undermining the overall goal of reducing emissions. This has raised alarms about the clarity of the market signals regarding the transition to alternative fuels.
Next Steps for Implementation
As the maritime industry prepares for the implementation of the new regulations, several key actions are required:
Ships must update their Ship Energy Efficiency Management Plan (SEEMP Part II) to include GFI reporting elements.
GHG emissions factors and sustainability declarations will need certification from an approved Sustainable Fuel Certification Scheme (SFCS).
By March 2027, the IMO will publish a list of recognized SFCSs to facilitate compliance.
The IMO’s framework represents a significant shift in maritime regulations, but the path forward is fraught with challenges. Stakeholders must work collaboratively to refine the implementation guidelines and ensure that the framework effectively drives down emissions without incentivizing inefficiency.
Sources
Riviera – News Content Hub, Riviera Maritime Media.
IMO framework sends mixed signals on ship efficiency :: Lloyd’s List, Lloyd’s List.
