Quick summary MEPC 78: Impact on commercial decarbonization

June 15, 2022

The outcome of the latest International Maritime Organisation (IMO) meeting, MEPC 78, shows that progress is being made on GHG matters. EEXI, CII and SEEMP guidelines were finalized, and the Mediterranean Sea will be considered a Sulphur emission control area (SECA). However, no decision regarding zero emissions target in 2050 was taken at this point.

What was approved?

Guidelines related to EEXI, CII and SEEMP were finalized during MEPC 78, making them ready for implementation. The following CII updates are highlighted:

  • 2022 Updated CII Guidelines: Adjustments for certain ship segments were approved; change of capacity unit from dead weight ton (DWT) to gross tonnage (GT) for ro-ro cargo ships, updated reference lines for combination carriers, ro-ro cargo ships and ro-ro passenger ships, and dedicated reference lines for high-speed crafts.
  • 2022 Interim Guidelines on Correction Factors and Voyage Adjustments, CII: New guideline including correction factors and voyage adjustments for various ship types and circumstances was approved. Several corrections and adjustments have been proposed, but few were implemented. Corrections for extensive port and waiting time, and adverse weather, were not included at this stage. The guideline is specifically named “interim” to emphasize that updates will be made when new data is available (expected revision in 2026).  

The Mediterranean Sea will be considered a Sulphur emission control area (SECA), requiring vessels to utilize bunkers with less than 0.1 % Sulphur content (Earliest enforcement May 2024).

An intersessional working group had developed draft guidelines on life cycle GHG intensity for marine fuels. In the 78th session the work was approved to continue through a correspondence group that shall provide an intermediate report at MEPC 79 (Dec 2022) and final report at MEPC 80 (spring 2023). The GHG intensity will include the impact from CO2, CH4 and N2O (in line with the proposal from the EU Parliament’s environmental committee regarding the revision of the union’s Emissions Trading System (EU ETS)).  

What was discussed?

The Intersessional Working Group on Reduction of GHG Emissions from Ships (ISWG-GHG) continues their work with the revised IMO GHG strategy. A revised strategy was not yet suggested, but they have identified the need to define intermediate targets, and to discuss definitions such as zero emissions and net zero.  Further discussion will take place in the close future, but the finalization and adoption of the revised strategy is not planned until MEPC 80.

Several proposals for market-based measures were discussed prior to MEPC 78, but they were not further addressed at the session. Discussions will continue at an intersessional meeting prior to MEPC 79. The following proposed measures are highlighted:

  • A levy system based on absolute well-to-wake GHG emissions, where the GHG price is determined by the IMO.
  • A levy system based on CII performance, where ships with CII performance below a benchmark must pay, whereas with performance above the benchmark receive a reward. The contribution is determined by the IMO, while the reward depends on the level of achievement of the fleet.
  • A levy system based on absolute tank-to-wake CO2 emissions where the revenues are partly used to provide a direct discount to zero-emission vessels. The CO2 price and discount are determined by the IMO.
  • An emissions cap-and-trade system, like the EU ETS, where the well-to-wake GHG emission level is set by the IMO and allowances are auctioned out. The carbon price is then determined by the market.

Factbox ENVI suggestion