“ ”


Arguably the most important global regulatory development shipowners need to have in mind while considering future strategy is the IMO GHG initial strategy, adopted by Resolution MEPC.304(72) on 13 April 2018.


per tonne of liquid fuel oil (MGO/ MDO/LFO/HFO) purchased. Approximately five billion US dollars will be gathered over the life of the programme – to be invested in


R&D projects for decarbonisation while cross-checking of payments against emissions will be reported in IMO DCS.


The Marshall Islands and Solomon Islands have suggested a more aggressive version with a mandatory payment of $100 per tonne CO2 equivalent by 2025, with upward ratchets on a five-yearly review cycle. This would likely mean a price on all GHG emissions by 2030 in the range of $250-300 tonne CO2 equivalent.


A submission by Norway has introduced three possible concepts. These include a fuel GHG intensity limit under which a ship could only bunker and use fuels with a CO2 or GHG emission factor below a certain level. This would be subject to a stepwise approach similar to the sulphur requirements in regulation 14, MARPOL Annex VI.


Also proposed is emissions cap and trading, similar to the EU ETS with the agreed cap determining the total amount of greenhouse gases that a ship can emit and emission allowances traded as needed through auctioning or other allocation processes.


Finally, carbon intensity indicators and credit trading/fleet averaging is proposed, based upon the recently approved Carbon Intensity Indicator


92 | The Report • June 2022 • Issue 100


and rating scheme. Ships that do not meet the target would need to acquire credits from ships that surpass the requirement. Under a fleet averaging scheme, emission credits could be redistributed between ships within the same company.


Well to Tank and Tank to Wake


Also important to monitor will be the development of the lifecycle GHG/carbon intensity guidelines (LCA) aim to incentivize the uptake of sustainable alternative low- carbon and zero-carbon fuels. These guidelines provide well-to-tank and tank-to-wake GHG emission factors for all fuels and electricity used onboard a ship.


Although the well to tank emissions are not accounted for in international shipping, the LCA Guidelines will provide information to ship-managers and charterers on the sustainability of the fuels, both for GHG and other emissions, so they can make informed decisions during the selection of the fuel to be used on board.


Tank to wake emissions now include methane (CH4) and nitrous oxides (N2O)-equivalent CO2 emissions. In addition fugitive emissions such as methane slip are being considered with the introduction of a slip factor expressed as % of fuel mass while default emission and slip factors per fuel type, engine/converter type are proposed.


The draft text sets the Global Warming Potential (GWP) of


methane over 100 years at 29.8 for fossil and at 27.5 for non-fossil methane and the GWP of N2O over 100 years at 273, however there was a call during the discussion at the ISWG-GHG11, fairly supported, to account for GWP20 instead of 100.


A carbon source factor (SF) may be introduced according to IPCC accounting principles when calculating the tank to wake GHG emissions. This factor determines if tank to wake CO2 emissions should be accounted for in the IMO GHG inventory for international shipping (SF = 1) or not (SF = 0) and should be multiplied with the CO2 emission factor for the specific fuel. For properly certified biofuels and fuels produced with carbon capture, where the captured CO2 is accounted in national GHG inventories of any UNFCCC member countries, the SF could be zero.


EU Impact


The European Union’s ‘Fit for 55’ package of measures and in particular, the extension of the EU ETS to shipping and the FuelEU Maritime Regulation are subject to negotiation in Brussels while shipowners put efforts to introduce amendments to the originally proposed text.


Concerning the revision of the EU ETS, discussions include the definition of the ‘commercial operator’ in a bid to make charterers equally responsible for carbon emissions as well phasing-in the implementation between 2023 and 2025 or 2026.


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