MEPC 82: In the long run, we’re all dead

The International Maritime Organization’s 82nd Marine Environment Protection Committee meeting (MEPC 82) took place last week. Here is my take on proceedings as a communications professional, amateur economist, and passionate environmentalist.

MEPC 82 outcomes

This meeting focused on the mid-term measures required to achieve the IMO’s Revised GHG Reduction Strategy for Global Shipping. The main economic measure on the table was a global carbon levy, and key discussions were held on the specific progressive price that would be applied to CO2, and how the revenue generated by the carbon pricing mechanism would be disbursed.

From a more technical standpoint, a goal-based international marine fuel standard was on the table. This regulation would drive a phased reduction in the GHG intensity of marine fuels. Some of the proposals integrated the fuel standard with the carbon levy, while others left it as a standalone.

The adoption of a global renewable fuel standard, in particular, would be a major environmental win. I share Dr Martin Stopford’s concerns that shipping will be at the back of the queue when it comes to accessing renewable green e-fuels due to competition from road transport and the chemical industry, as well as a lack of collaboration between the shipping and energy sectors.

A clear and substantive renewable marine fuel standard would provide shipowners and operators with the regulatory certainty required for them to send out those all-important demand signals to fuel suppliers, who can, in turn, make essential final investment decisions on supply-side projects. Regulatory support is one key to unlocking supply and demand for green fuels today.

As John Maynard Keynes said, “In the long run, we are all dead”. A broad interpretation is that governments (and regulators) should address problems in the short term, rather than waiting for market forces to fix them over the long term – at which point it’s too late. This seems quite applicable to shipping’s renewable fuel stalemate right now.

The fuel standard and CO2 levy are promising, however significant progress still needs to be made for delegates to agree on any final legislation. Fortunately, the IMO has not kicked the can as far down the road as it has in the past. Participants have agreed to an additional meeting in February 2025, so that measures can be approved at MEPC 83 in April.

For more details on these mid-term measures, I would recommend reading this free article from Enes Tunagur, Sustainability Editor of Lloyd’s List. For broader MEPC 82 outcomes – including on ballast water management, Emission Control Areas, and plastic pellet pollution – this synopsis from SAFETY4SEA offers a useful overview.

Hail to the regulators?

Some commentators, especially in the NGO space, have criticised the lack of concrete decisions made at MEPC 82, and don’t think measures have gone far enough, but I believe we must be ambitious yet realistic. When I started in shipping, the IMO was rightly criticised for its weak GHG emissions strategy. At that time, a carbon price would’ve been a starry-eyed dream. However, the strategy is now much more ambitious, some meat has been added to the bones, and, anecdotally, I’ve also seen perceptions of the IMO and MEPC improve significantly.

As well as the IMO, we have the EU to praise for this improvement. By developing their own strong legislative package, they forced the IMO’s hand; to regulate or risk the proliferation of fragmented national and regional regulations. FuelEU Maritime and EU ETS are also an excellent basis for the IMO’s mid-term measures.

FuelEU Maritime is especially valuable because it is much harder for owners to pass the costs of compliance on to customers, its pooling system genuinely incentivises investment in renewable fuels, and failure to comply will result in substantial financial penalties. We can only hope the IMO fuel standard somewhat mirrors FuelEU Maritime on the global stage.

The IMO is most open for criticism on its Carbon Intensity Indicator (CII) vessel efficiency ranking system. Despite promises to improve CII, and some iterations at MEPC 82, it appears to still have ‘teeth made of jelly’. That is to say, it has no real enforcement mechanisms and relies on commercial impacts generated by others in the shipping value chain, such as charterers.

There have also been some complaints that regulators aren’t focused enough on directly driving vessel and operational efficiency investments. We can all agree on the importance of adopting technologies like voyage optimisation software and air lubrication systems today, but I’d argue the market is generating demand quite well already. Regulations are also, more indirectly, enhancing the commercial rationale for vessel efficiency by adding to fuel costs. With all this in mind, the IMO is probably right to focus on supporting the scale-up and use of greener fuels.

See the wood for the trees

I know we all just want to talk about the intricacies of ships and shipping 24/7, and this may seem like an existential wishy-washy waffle, but it’s important to take a step back and look at the bigger picture.

At the end of the day, while there is certainly a place for critiquing our regulators and one another, and we all have our favourite technologies or fuel decarbonisation pathways, it is also essential to remember that we’re all on the same side of the climate change battle. And what a massive battle it is. Now, I’m not one for climate alarmism, which often leads to climate fatalism, but I also believe we must not forget the ferociousness of the borderless, vast, and many-headed beast we’re fighting.

If we don’t act together now, align on our regulatory weapons, and collaborate across different sectors, then Keynes’ adage, ‘In the long run, we’re all dead’, may well become much more imminent and literal!