MEPC 81: Support For Pricing Greenhouse Gas Emissions from Shipping Grows But Important Pieces Of Puzzle Still Missing

As this week’s meeting of the International Maritime Organization’s Marine Environment Protection Committee (MEPC 81, March 18-22) winds down, the Clean Shipping Coalition welcomed the growing support for a greenhouse gas (GHG) emissions levy, but warned that IMO member states must also maintain focus on other key issues such as the global fuel standard (GFS) and the improvement of how energy is used in ships via the carbon intensity indicator (CII).

“MEPC81 reaffirmed to us that countries clearly back a GHG emissions levy rather than weaker alternatives, which sends a strong signal for further developing the policy”, said Clean Shipping Coalition President John Maggs. “However the IMO must not lose sight of the other, equally important measures, namely agreeing on a clean energy standard (GFS) and improving the energy efficiency of ships through the Carbon Intensity Indicator (CII). On the latter in particular, I was delighted to see IMO member states this week firmly reject the shipping industry’s attempt to downgrade the CII rules. This is a good omen not just for the CII’s big moment at MEPC 82 this October, but the whole discussion on measures to deliver the 2023 GHG Strategy emissions reduction goals.”

“The UN is on the edge of adopting the world’s first-ever global emissions price, but the policy will only be as successful as countries make it to be”, said Sandra Chiri, Shipping Manager, Ocean Conservancy. “The March talks at the IMO gave us hope that a clear majority of countries—the Caribbean, the Pacific, Africa, but also the EU and Canada—understand the huge opportunity of pricing shipping emissions for the industry’s clean transition and for making sure this transition benefits all developing countries. It’s regrettable that a small but persistent minority strives to water down this vital climate measure, with a proposal of their own that we know is not ambitious enough. As the IMO negotiations move forward, I hope to see countries engage constructively in designing the future GHG price in a way that protects our oceans, livelihoods and the planet.”

“The IMO agreed last year that some form of emission pricing is necessary to meet shipping’s climate commitments, and during these last two weeks we were pleased to see an overwhelming majority of countries backing a fully-fledged Greenhouse Gas emission price – i.e. a levy, with the Caribbean Island states in particular putting a new wind in the sails of this key climate policy”, said Anaïs Rios, Shipping Policy Officer, Seas At Risk. “The Pacific Islands and Belize proposal for a levy of $150/tonne of GHG emissions is the most mature and ambitious proposal on the table, and we urge governments to work constructively over the summer ensuring it prioritises equity and fosters a just transition for all involved.”

“The IMO negotiations this week achieved a near consensus to move ahead with a global fuel law that will create demand for green fuels”, said Faig Abbasov, Shipping Director, Transport & Environment. “However, the success of the fuel standard rides on proper accounting of emissions across the supply chain. Negotiators must take lifecycle emissions into account so that the likes of grey hydrogen, LNG and biofuels do not simply lead to one bad fuel replacing another. And a green fuels standard alone is not enough. Carbon pricing will ensure that polluters pay, while efficiency standards can ensure that ships start getting cleaner today, not just in 2050.”

About the Carbon Intensity Indicator

Developed as an integral component of a set of IMO policies intended to drive greater energy efficiency of ships, the Carbon Intensity Indicator (CII) entered into force on 1st November 2022 and applies from the 1st January 2023 to all ships covered by the IMO Data Collection System.

The IMO’s revised Carbon Intensity Indicator (CII) will be central to the IMO’s ability to drive emission reductions on a pathway that meets the targets contained in its revised greenhouse gas (GHG Strategy) which commits the shipping industry to decarbonise by 2050 and aims to cut emissions by 30% by 2030 and 80% by 2040. The new GHG Strategy also contains a commitment to ensure a 5-10% uptake of zero emission fuels/energy sources by 2030.
As warming has already reached approximately 1.2C, early emissions reductions are especially important to avoid breaching the 1.5C threshold and to avoid triggering climate tipping points. Even assuming that a maximum of 10% new near-zero and zero-emission fuels are available by 2030 there remains a very significant “emissions gap” that must be filled by improvements in ship energy efficiency driven by the Carbon Intensity Indicator – and there is no other measure on the table that can do this.

If the IMO and international shipping are to meet their climate obligations and at least achieve the emissions reductions called for in the revised GHG Strategy then a number of changes will need to be made to the CII. Perhaps most important, after raising the levels of ambition (the energy efficiency improvement requirements), is ensuring that the targeted emission reductions are reliable and real. The current “soft” enforcement will need to be replaced with a more traditional approach that has real consequences for failing to comply.

According to a paper submitted to MEPC 81 by the Clean Shipping Coalition, Pacific Environment and WWF, the “revision of the CII, which is due to start at MEPC82 (September 30 – October 4th) and conclude before the end of 2025, is a key opportunity to bring it up to date with the revised GHG Strategy and to make sure that it works in the future in a coherent way with the contents of the basket of mid-term measures being negotiated at the same time. With the absence of any firm enforcement mechanism and with annual energy efficiency improvement requirements that are little better than ‘business as usual’ it is perhaps understandable that some have referred to this first period of CII as an ‘experience building phase’. But this phase must come to an end, and from 2027 the CII must be in a position to play a major role, alongside the proposed goal-based fuel standard (GFS) and other mid-term measures, in driving the urgently needed ship climate emission reductions.”

The co-benefits of using wind-powered and slower ships include reduced underwater radiated noise and whale strikes which leads to healthier whale and other ocean wildlife populations that can contribute to the ocean’s ability to sequester carbon. As the paper states “as the recent Organization’s workshop on the relationship between energy efficiency and underwater radiated noise (URN) clearly illustrated, ships that operate more efficiently, with the objective of reducing GHG emissions, are also quieter and less likely to disturb whales and other ocean wildlife. When ships slow down, they are also less likely to collide with and kill/injure whales and other ocean wildlife and are, generally, less polluting. This is the other largely unacknowledged aspect of shipping’s climate impact: ship operations are routinely and relentlessly undermining global ocean health and hindering the ocean’s ability to help us mitigate global heating. Healthy ocean ecosystems are needed to win the fight against global heating, and for that, a general lowering of shipping’s environmental impact is needed, not just for it to reduce its GHG emissions, as important as that is.”
Source: Clean Shipping Coalition