"No Standout Outcome" From IMO's Latest Greenhouse Gas Talks

At the IMO Marine Environment Protection Committee's 78th meeting (MEPC 78) this past week, little forward movement was observed on shipping's climate ambitions, though a majority of delegates supported the concept of bringing IMO greenhouse gas targets in line with the Paris Climate Agreement.

"The meeting was not planned as a key decision-making point for agreement/adoption of any of the items under IMO’s Reduction of GHG Emissions from Ships work," reported University Maritime Advisory Services (UMAS) in a sum-up briefing. "It is therefore not necessarily surprising, that there is no standout outcome. The positive from the meeting is that discussions on ambition/measures remain on track for clarity at MEPC 80 (summer 2023)."

As predicted by third-party observers, the ICS-sponsored plan for a small bunker tax to fund green propulsion research did not win approval. The $2 per tonne research levy had to compete on the climate-ambition spectrum with far more aggressive market-based measure levies, like the steep bunker tax plan submitted by Japan earlier this year. The ICS plan did not pass at MEPC 77 in 2021, and it did not attract much support at a pre-meeting in the run-up to MEPC 78, according to consultancy University Maritime Advisory Services (UMAS).

"By refusing to take forward the shipping industry’s proposed research and development fund, the IMO has wasted its opportunity to kick start a rapid transition to zero-carbon technologies," said ICS Secretary General Guy Platten in a statement. "We have been frustrated by short-sighted political maneuvering . . . Some claimed that the fund was a market-based measure and did not go far enough, deliberately misinterpreting our intention."

Though the fund was not intended as a market-based measure, ICS Deputy Secretary General Simon Bennett said that its general structure could be reused by IMO for that purpose going forward. “The possibility remains for the IMO to make use of the fund’s proposed regulatory architecture to underpin a future global carbon levy on shipping’s CO2 emissions, to close the price gap with zero-carbon fuels," Bennett said. 

ICS plans to hold an industry conference on June 21 to discuss practical ways to decarbonize shipping, "despite the lack of government leadership at IMO," Platten said. 

Though the ICS proposal did not move ahead, the overarching sentiment among member states looks to be in favor of greater climate ambition, advocates said. "It is clear that there is a general acceptance amongst IMO member states that the globally shipping industry must achieve net zero or absolute zero by 2050 at the latest," observed the Clean Arctic Alliance, which advocates for cuts to black carbon and CO2 emissions.

As a sign of potential progress, MEPC 78 resolved to develop lifecycle guidelines for evaluating the greenhouse gas emissions from fuels, including the critical question of whether to include well-to-tank emissions created during fuel production and transport. The decision to include or exclude these emissions will have tremendous impact on the regulatory treatment of different fuel supplies, like LNG. 

For the first time, MEPC also endorsed the idea to develop market-based measures (like a carbon tax or carbon trading system) “as part of a basket of mid-term measures." That decision will not come until next year at the earliest, but the consensus decision in favor of some form of pricing is a new development.

“IMO continues to be on track for MEPC 80 in summer 2023 to be a key point at which direction, targets, GHG emissions framing (well-to-wake) and policy, including GHG pricing, will clarify," said Dr. Tristan Smith, the director of UMAS. "The momentum is building for a significant strengthening of ambition and policy action, which will then affect opportunities risks and values in the sector including in this decade."

Separately, MEPC 78 approved a longstanding proposal to designate an emissions control area for sulfur oxides for the Mediterranean Sea, similar to the ECAs in place for Northern Europe and North America. SOx has measurable long-term negative effects on human health and a minor localized cooling effect on atmospheric temperature.