GHG Intersessional Working Group – IMarEST reports on the key outcomes

The intersessional working group meeting on the reduction of Greenhouse Gas (GHG) emissions from shipping, held by IMO on 19-23 October 2020, and focused solely on Short Term Measures (STM). It was related to draft amendments to MARPOL Annex VI to reduce the carbon intensity of existing ships and the assessment of impacts on States.

The member States agreed on a combined proposal as a way forward. The key measures outlined in the combined proposal were the Energy Efficiency Existing Ship Index (EEXI) and the Carbon Intensity Indicator (CII).

Several member States considered that the EEXI alone was regarded as insufficient to meet the targets of the Initial Strategy for a variety of reasons including the so-called rebound effect, the fact that technical efficiency is generally a poor proxy of actual CO₂ intensity, and the existence of market failures, which drive operational CO₂ intensity, such as charterers’ right to determine ship speed. However, many other member States were of the view that the EEXI measures alone would be sufficient to meet the targets of the Initial Strategy.

Turning to the CII, even on an operational basis, this would have to be set sufficiently high to meet the IMO Initial Strategy ambition, given that demand for shipping services is expected to continue growing in the years leading up to 2050. Operational CII needs to have sufficient enforcement provisions. However, the actual CO₂ emissions per unit of transport work for a specific period or voyage, varies according to factors which influence fuel oil consumption and transport work.  For example, operational efficiency is influenced by capacity utilisation, sailing speed, displacement, trim, fouling, wind force and sea state. In addition to this concern, other elements related to the CII proposal including metrics for measuring CIIs and the associated impact on member States were missing or were incomplete. CII was therefore considered not to be mature enough to have enforcement provisions attached to it.

Notwithstanding the missing CII metrics and reduction factors, it was agreed that complementing EEXI with operational/CII through a rating mechanism would better incentivise operating ships thereby minimising the risk of ships operating inefficiently with an improved EEXI.

Furthermore, the meeting also agreed to strengthen the SEEMP framework under the mandatory ISM Code to subject it to a continuous improvement process.

The technical deliberations of the week concluded in a combined compromise proposal, which had EEXI reduction factors across all ship sizes and types along with a mandatory CII rating mechanism. A review of these measures will be undertaken for completion by 1 January 2026.

Although a handful of delegations expressed dissatisfaction with this outcome, the new proposal was nevertheless supported by the majority of member States and forwarded to MEPC 75.

Further work is required to assess the factors behind CO₂ intensity drivers for the period 2008-2018 so that informed judgements can be made on the effectiveness of proposed short-term measures as follows:

• Mandatory/voluntary policies (e.g. impact of SEEMP during 2012-2018 period)
• Technical measures (e.g. impact of EEDI during 2012-2018 period)

Further work is also urgently required on mid- to long-term (MLT) measures in order to meet the objectives of the IMO initial strategy and the Paris Agreement. Although shipping was not included in the final text of the Paris Agreement, IMO has set itself a long-standing mandate to contribute to the fight against climate change by addressing greenhouse gas emissions from ships.

The above work on MLT measures needs to start now as there is increased pressure on this policy to deliver.

During the ISWG-GHG 7, IMarEST made the following interventions as formulated by members and approved by the Technical Leadership Board, a committee of IMarEST Council:

Further consideration of draft amendments to MARPOL Annex VI to reduce the carbon intensity of existing ships

Document ISWG-GHG 7/2/26 has already significantly reduced the stringency of short-term measures to be taken, in comparison with proposals earlier on the table. A further decrease in the level of ambition, by selecting the less ambitious options, is not acceptable. It is detrimental in achieving the required CO₂ reductions and undermines the role of IMO in the fight against GHG emissions. We have seen multiple initiatives taken elsewhere in the industry, such as the Poseidon Principles by the financial community, the Sea Cargo Charter by the charterers and the Getting to Zero coalition to have zero-emission ships by 2030, to mention but a few examples. IMO must now step forward and fulfil its leadership role in international rulemaking for shipping by properly implementing its own agreed strategy and at the same time giving effect to the expectations from society.

Consideration of a compromise proposal

The IPCC is explicit that this decade's emissions will determine our success or failure on preventing a temperature rise above 1.5°C – and to be able to hope for success, a halving of emissions by 2030 is needed. IMO's Initial Strategy was clear that we should be pursuing efforts to help achieve this temperature goal. Preventing temperature rise above 1.5°C will be critical for avoiding dangerous climate change which could potentially have grave impacts for many States, as well as for avoiding further severe impacts on ocean ecosystems.

The combined proposal as currently drafted includes two elements, EEXI and CII. The EEXI component has stringencies that from evidence in the Fourth IMO GHG Study can be expected now to have negligible impact on further improving the fleet’s operational carbon intensity. EEXI is also a less cost-effective policy given it applies regulation to the ship in an idealised condition and will incentivise technical specifications optimised for a condition far away from real operating conditions.

The combined proposal’s components around CII are therefore of critical importance to IMO in order to achieve the objectives set out in the Initial Strategy. For the purpose of ensuring achievement of the carbon intensity reduction outcome, satisfaction of the IMO Initial Strategy ambitions, and the creation of a level playing field to unlock investment and action in industry, the CII targets must have a fair enforcement mechanism. Option 2.2 provides the basis for that fair and effective enforcement mechanism. The earlier fair and strong enforcement is applied, the greater the carbon intensity reduction that will be achieved. Introducing stringent enforcement as late as 2029/30 as currently drafted in 2.2 creates a significant risk of emissions not peaking before that point, which would be fundamentally adrift from the action necessary to provide a proportionate response to the Paris Agreement.

We understand that further work is needed to ensure CII targets for different ship types are established and this could be taken forward in the guidelines, and we look forward to contributing to that work.

We recognise that the impacts of the combined proposal need further assessment, including using insights obtained from improved data. We are working on the improvement of data resources and information available to States for impact assessments and also look forward to further contributing to that work.

We are concerned that the IMO will be unable to deliver the Initial Strategy. It is our view that the EEXI impacts on GHG as drafted in document ISWG-GHG 7/2/26 will be negligible and these EEXI stringencies in document ISWG-GHG 7/J/5 are even weaker, so we can expect even less GHG impact. The CII remains of critical importance for delivering IMO’s Initial Strategy ambitions but J/5 has no corrective action enforcement relating to CII.

The Fourth IMO GHG Study shows energy efficiency and carbon intensity of the fleet did improve over the period 2013 to 2018, but at a much lower rate than 2008 to 2013 which is the period before IMO adopted SEEMP in 2013. By 2018, the carbon intensity increment was 1-2% per annum improvement – lower than the rate of demand growth and projected demand growth. This evidence is why we believe document ISWG-GHG 7/J/5 as drafted will not stimulate innovation and action or significant carbon intensity improvement and jeopardises IMO's Initial Strategy ambitions.

The initial GHG strategy envisages, in particular, a reduction in carbon intensity of international shipping (to reduce CO2 emissions per transport work, as an average across international shipping, by at least 40% by 2030, pursuing efforts towards 70% by 2050, compared to 2008); and that total annual GHG emissions from international shipping should be reduced by at least 50% by 2050 compared to 2008.

The strategy includes a specific reference to “a pathway of CO2 emissions reduction consistent with the Paris Agreement temperature goals”.

Note: The Paris Agreement on climate change was agreed in 2015 by Parties to the United Nations Framework Convention on Climate Change (UNFCCC) and entered into force in 2016. The Paris Agreement central aim is to strengthen the global response to the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius. The Paris Agreement does not include international shipping, but IMO, as the regulatory body for the industry, is committed to reducing greenhouse gas emissions from international shipping.

Paper ISWG-GHG 7/2/26 Further consideration of concrete proposals to improve the operational energy efficiency of existing ships, with a view to developing draft amendments to chapter 4 of MARPOL Annex VI and Associated Guidelines, as appropriate Proposal for a mandatory goal-based technical and operational short-term measure with combination of EEXI, SEEMP, CII and rating mechanism

 ¹The initial GHG strategy envisages, in particular, a reduction in carbon intensity of international shipping (to reduce CO₂ emissions per transport work, as an average across international shipping, by at least 40% by 2030, pursuing efforts towards 70% by 2050, compared to 2008); and that total annual GHG emissions from international shipping should be reduced by at least 50% by 2050 compared to 2008.

²The strategy includes a specific reference to “a pathway of CO2 emissions reduction consistent with the Paris Agreement temperature goals”. Note: The Paris Agreement on climate change was agreed in 2015 by Parties to the United Nations Framework Convention on Climate Change (UNFCCC) and entered into force in 2016. The Paris Agreement central aim is to strengthen the global response to the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius. The Paris Agreement does not include international shipping, but IMO, as the regulatory body for the industry, is committed to reducing greenhouse gas emissions from international shipping.

³Paper ISWG-GHG 7/2/26 Further consideration of concrete proposals to improve the operational energy efficiency of existing ships, with a view to developing draft amendments to chapter 4 of MARPOL Annex VI and Associated Guidelines, as appropriate Proposal for a mandatory goal-based technical and operational short-term measure with combination of EEXI, SEEMP, CII and rating mechanism