ICS welcomes progress at IMO meeting on GHG reduction but warns much remains to be resolved

Following intensive negotiations at the IMO’s Intersessional Working Group on Reduction of Greenhouse Gas (GHG) Emissions from Ships (ISWG-GHG 18) last week, Guy Platten, Secretary General of the International Chamber of Shipping (ICS), emphasised the need for urgent progress ahead of the critical IMO Marine Environment Protection Committee (MEPC 83) in April.

“While ICS is broadly satisfied with the progress made on a radical new package of global GHG reduction regulations, including a GHG emissions pricing mechanism, much work urgently remains to be done,” Platten said. “But despite divergence on many issues, it is encouraging that negotiations continue in a positive and cooperative spirit.”

With only six weeks remaining before the MEPC in April , ICS remains confident that IMO Member States be able to seal the deal and approve fit for purpose amendments to the MARPOL Convention.

No major breakthrough was reached towards a final agreement about a universal ‘levy’ on ships’ GHG emissions, which is widely supported by the shipping industry as the best mechanism to accelerate the transition to net-zero emissions by 2050.

Encouragingly, about three quarters of IMO States now strongly support the GHG contribution system proposed by the ‘50-plus group’ of governments and ICS. However, concerns raised by a significant minority, including China and Brazil, must be addressed in a simple and pragmatic way to build complete consensus.

ICS welcomes one major positive outcome in the form of the broad agreement among governments to establish an IMO Fund, a concept ICS has long championed. It has also been generally agreed that this IMO Fund, expected to generate billions of US dollars annually from charges for ship’s GHG emissions, should be used to provide financial rewards for first movers and ships using ‘ZNZ’ fuels (such as green methanol, biomethane, green ammonia, and sustainable biofuels). These incentives are crucial for narrowing the cost gap with conventional marine fuels and catalysing the production and uptake of new fuels.

Significant details remain unresolved regarding the proposed GHG intensity fuel standard. However, ICS is pleased that its simpler proposal for GHG surcharge fees, which would be applied to ships unable to comply due to fuel availability constraints, remains under consideration.

Importantly, the ICS notes widespread support from developing countries for this more simple and transparent approach instead of an overly complex system requiring ships to trade compliance units with unpredictable and volatile pricing. Another key issue for shipowners is whether pooled compliance among different shipping companies will be permitted, given the expected limited availability of compliant marine fuels.

“To ensure progress, ICS will continue to put forward pragmatic and constructive proposals to bridge differences, particularly on the crucial issue of economic incentives for the use of ZNZ fuels.” Guy Platten continued.

“Achieving consensus is crucial for delivering the goals of the revised GHG Reduction Strategy, which were unanimously agreed by all governments in 2023.”