Delegates have approved the global greenhouse gas (GHG) pricing mechanism proposal at the International Maritime Organization's (IMO) 83rd Marine Environment Protection Committee (MEPC) meeting, pending an adoption vote at the next MEPC in October.
The proposal passed by a majority vote, with 63 nations in favor including EU states, the UK, China and India, and 16 members opposed, including Mideast Gulf states, Russia, and Venezuela. The US was absent from the MEPC 83 meeting, and 24 member states abstained.
The proposal was accompanied by an amendment to implement the regulation, which was approved for circulation ahead of an anticipated adoption at the October MEPC.
Approval was not unanimous, which is rare. If adoption is approved in October at a vote that will require a two-thirds majority, the maritime industry will become the first transport sector to implement internationally mandated targets to reduce GHG emissions.
The text says ships must initially reduce their fuel intensity by a "base target" of 4pc in 2028 (see table) against 93.3 gCO2e/MJ, the latter representing the average GHG fuel intensity value of international shipping in 2008. This gradually tightens to 30pc by 2035. The text defines a "direct compliance target", that starts at 17pc for 2028 and grows to 43pc by 2035.
The pricing mechanism establishes a levy for excessive emissions at $380 per tonne of CO2 equivalent (tCO2e) for ships compliant with the minimum 'base' target, called Tier 2. For ships in Tier 1 — those compliant with the base target but that still have emission levels higher than the direct compliance target — the price was set at $100/tCO2e.
Over-compliant vessels will receive 'surplus units' equal to their positive compliance balance, expressed in tCO2e, valid for two years after emission. Ships then will be able to use the surplus units in the following reporting periods; transfer to other vessels as a credit; or voluntarily cancel as a mitigation contribution.
IMO secretary general Arsenio Dominguez said while it would have been more preferable to have a unanimous outcome, this outcome is a good result nonetheless.
"We work on consensus, not unanimity," he said. "We demonstrated that we will continue to work as an organization despite the concerns."
Looking at the MEPC session in October, Dominguez said: "Different member states have different positions, and there is time for us to remain in the process and address those concerns, including those that were against and those that were expecting more."
Dominguez said the regulation is set to come into force in 2027, with first revenues collected in 2028 of an estimated $11bn-13bn. Dominguez also said there is a clause within the regulation that ensures a review at least every five years.
| IMO GHG reduction targets | ||
| Year | Base Target | Direct Compliance Target |
| 2028 | 4% | 17% |
| 2029 | 6% | 19% |
| 2030 | 8% | 21% |
| 2031 | 12% | 25% |
| 2032 | 17% | 30% |
| 2033 | 21% | 34% |
| 2034 | 26% | 39% |
| 2035 | 30% | 43% |
| Source: IMO | ||
