Starting as early as 2003, the EU warned that it would take regional action to reduce shipping GHG emissions if the IMO didn’t take global action. Later a deadline of 2011 was set and after it passed, with still no action, the European Commission started public consultations on what possible measures the EU should implement. However, this coincided with rising controversy about foreign airlines being included in the EU’s aviation ETS and, on 1 October 2012, the EU transport and climate commissioners stepped back from regulating shipping emissions. They announced instead that the Commission would first propose a monitoring, reporting and verification (MRV) system to provide data on shipping emissions based on fuel consumption. Other steps, such as setting a reduction target and implementing CO2 reduction measures, would come at a later stage. Read our reaction to this decision.
The EU regulation on MRV, which was finally agreed in 2015, requires operators of all ships above 5,000 gross tonnes calling at EU ports to monitor from 1 January, 2018 and publicly report by 30 April the following year, every year, three metrics which measure the environmental performance of ships. These measures are: the theoretical design energy performance of the ship according to the IMO’s Energy Efficiency Design Index (EEDI); real-world fuel consumption; and real-world operational energy efficiency, which is the amount of fuel consumed divided by transport work (that is, the amount of cargo carried multiplied by distance covered). The more cargo a ship can carry using the same amount of fuel, the more efficient and cheaper to run it is. The publication of ships’ real-world operational energy efficiency will provide shipping users in Europe and worldwide with transparent data to identify the most efficient ships and practices. This can trigger a virtuous cycle of increased competition among operators and ship owners, which will drive fuel savings and emissions reductions. The MRV is intended as a stepping stone for an eventual measure to require actual emissions reductions.
Following the adoption of the MRV Regulation and the Paris agreement, there was still no sign of global action at IMO meetings. This led the European Parliament to push for the inclusion of shipping in the EU emissions trading system (ETS) after the European Commission failed to include the sector’s emissions in their phase 4 ETS review proposal. The Parliament proposal would include EU-related shipping emissions under the ETS from 2023 if the IMO did not deliver a global deal by then – coinciding with the end of the IMO’s seven-year GHG work plan. According to the Commission’s own 2013 impact assessment, shipping CO2 emissions could be reduced cumulatively by 80 million tonnes by 2030 – the total annual emissions of Austria – if the sector were included in the ETS. Read our briefing here.
IMO seven-year work programme, EEDI review, data collection system
At the 70th session of the IMO’s maritime environment protection committee (MEPC) in October 2016, agreement was finally reached to restart the organisation’s GHG work plan which had commenced, already late, in 2003 – six years after Kyoto. Work on the plan had halted in 2011-12 for several years while states haggled over technical assistance to developing countries to implement the 2011 EEDI. Restarting it took another three years as flag states and industry argued that no concrete action plans could be drawn up before bottom-up ship emissions data had been collected. To further complicate the matter, it was also argued that a decision to collect ship data would only come after it was agreed what the data would be used for. That line was dropped when the EU agreed its MRV system in 2015. The IMO then moved to develop its own data collection system – the DCS – subject to the now famous three-step approach caveat which effectively hijacked the GHG work plan: collect data from 2019 to 2021; then examine it from 2021 to 2023; then discuss potential consequences but without any commitment to take action at the end.
The GHG work plan had only been reactivated due to an initiative of the Marshall Islands to have the IMO agree a global ship emissions reduction target. Industry and the IMO resisted, but after Paris more and more countries, led by some in Europe, pressed for renewed action.
At the same meeting of the MEPC in October 2016 which agreed the GHG work plan, the IMO halted its work to make the EEDI fit for purpose, postponing analysis to strengthen ship efficiency targets until 2018. A delegation of the European Parliament’s environment committee began attending MEPC from 2015. Recognising the slow progress at the IMO, a cross party group of MEPs developed a proposal to link shipping to the fourth period of the EU ETS (2021-2030) as a review was underway to ensure that the EU met its 40% reduction commitment under Paris. Amendments to the EU ETS were developed to include shipping in the ETS via a Maritime Climate Fund if action at the IMO did not materialise. The prospect of shipping emissions, left unaddressed, undermining climate action in the road transport sector was enough to mobilise cross-party support. In February 2017 EU lawmakers voted to include shipping in a reformed ETS from 2023 if the IMO had not acted by then.
The IMO met again in mid-2017, firstly for a week-long intersessional to kick off the GHG work followed by the previous MEPC meeting. The outcome was not very encouraging. Despite a strong push from the Pacifics and High Ambition Coalition countries, IMO members stepped back from committing to a global reduction target – or even a declaration about one – with much discussion focusing on the impacts of any action to reduce emissions in developing countries. The most positive development saw a list drawn up of possible measures to reduce emissions which included ship speed management. Black carbon abatement was excluded from the list ostensibly because it was being handled in the PPR subcommittee, and it wasn’t a GHG.
In October 2012 the European Council formally adopted the revision of the EU Directive limiting the sulphur content of fuels used by ships in EU seas. From January 2015, ships were only allowed to use fuels with a maximum of 0.1% sulphur content, down from 1.5% previously permitted in the North Sea, Baltic Sea and English Channel. They could either use cleaner fuels, which are more expensive, or install abatement technologies such as scrubbers. Read our briefing on the issue. In parallel, ships sailing in other EU waters and the rest of the world will be allowed to use fuels with a maximum of 0.5% sulphur content from 1 January 2020 (adopted by the IMO in 2016). T&E’s role in securing 2020 as the effective start date of the global 0.5% sulphur content limit could not be overstated. T&E, through the CSC, secured a seat at the steering committee overseeing the IMO fuel availability study. The study would analyse whether or not there would be enough 0.5% sulphur content compliant fuel available in 2020 to start the new standard in 2020 or delay it to 2025. At the steering committee, T&E made sure the study was performed by a neutral consultant (CE Delft) and not the one favoured by industry, which had in the past concluded there would not be enough compliant fuel in 2020.