IMO MEPC 78 Outcomes Summary

There were no landmark decisions made at the recent IMO Marine Environmental Protection Committee meeting (MEPC 78), 10th to 17th June 2022, although none were really expected. However, the overall sentiment suggests that there were some encouraging signs of the IMO moving in the right direction in terms of its ambition for industry decarbonisation.

The following documents BLUE’s top line summary and key highlights from the session.

KEY TAKEAWAYS:

1

Five more countries —the Cook Islands, Mexico, Myanmar, Colombia and Malaysia — joined the list of member nations in favour of a zero-carbon goal.

2

For the first time, MEPC also endorsed the concept of developing market-based measures (such as a carbon tax or carbon trading system) “as part of a basket of mid-term measures.” This decision will not come until 2023 at the earliest, however, the general consensus in favour of some form of pricing is a new development. There were also discussions on deploying revenue from carbon pricing in shipping to out-of-sector uses, which could increase the chances of an agreement on market-based measures.

3

There was a change to the timetable on lifecycle guidelines, which will now not be adopted at MEPC 79, as originally intended, but are now scheduled for adoption at MEPC 80 (scheduled for summer 2023).

4

MEPC 78 rejected a shipping industry-backed proposal to establish a $5bn research and development board and associated research fund that would promote decarbonisation; this was criticised by ICS, one of the sponsors of the proposal.

5

MEPC 78 approved a longstanding proposal to designate an emissions control area for sulphur oxides for the Mediterranean Sea, similar to the Emission Control Areas (ECAs) in place for Northern Europe and North America.

6

MEPC 78 finalised guidelines related to the EEXI, CII and SEEMP, which means that they are ready for implementation.

REACTIONS

According to analysis by University Maritime Advisory Services (UMAS), there seems to be positive momentum with regards to (1) more ambitious targets, and (2) market-based measures:

“Zero GHG by/no later than 2050 was mentioned by an increasing number of IMO Member States – which increases the likelihood of this target or similar being the outcome in 2023, which in turn dramatically increases the rate at which shipping will need to increase efficiency, ramp up its use of zero emission fuels, and phase out fossil fuel and incremental fuel solutions.

Discussions on the need for an equitable transition, and the components that this entails, possibly including out-of-sector deployment of revenues raised from GHG/carbon pricing. This increases the chance of a consensus being achieved in the difficult MBM/carbon pricing topic, a key enabler of flowing investment for the transition.” 

According to UMAS, this means “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. 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.”

UMAS produced this timeline and you can read their full analysis here.

Finally, the Clean Arctic Alliance expressed disappointment, claiming that IMO is “still stalling on immediate climate action”. In essence, they say:

“It’s clear that IMO member states have not paid heed to the stark warnings provided by recent IPCC reports, which should have been enough to provoke countries into dramatically reducing CO2 and black carbon emissions from the global shipping industry this decade. This can still be achieved by committing to raise the carbon intensity indicator requirements to a 7% annual improvement in carbon intensity – to be applied to all ships – and by supporting deep mandatory cuts in black carbon emissions from ships operating in and near the Arctic”.

“However, the strong statements made this week by some IMO members regarding the level of ambition needed for the review of the IMO’s greenhouse gas strategy can be seen as progress, and while only preliminary views were exchanged this week, 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 – notably there was support for a 50% reduction by 2030 which is needed if we are to reach a 1.5ºC trajectory”.

Further reading – links to three articles about the outcomes of MEPC in key maritime media:
TradeWinds, Lloyds List and the Maritime Executive.