The MEPC 81 meeting concluded on 22nd March 2024, further clarifying the risk and opportunity both for the international shipping value chain’s commercial decision making, and for this sector’s contribution to minimise the risks of dangerous climate change, UMAS noted in a report, highlighting six (6) key takeaways from the discussions that took place during the Committee.
New Chapter
Annex VI of MARPOL now has a very early draft of a new chapter (Chapter 5) – “regulations on the IMO net-zero framework”. This new chapter is just a framework of subheadings for now, but includes all the structure needed to adopt any of the GHG policy options currently under consideration (Goal-based Fuel Standard, flexibility mechanisms (a type of economic measure that involves credit-trading like an ETS), GHG levy, fund management and revenue disbursement, further details can be found in the ISWG GHG 16 readout).
Unanimity Of Member States
IMO does not need to make decisions by unanimity, but it helps the future work if that is the case. Previous negotiations on short-term measures were more fractious and difficult in the run up to agreement/adoption – similarly so was the initial strategy negotiation that was ultimately not supported by all countries. Building on the unanimity associated with the adoption of the Revised GHG Strategy, the new MARPOL chapter was well received by all countries which is a positive signal for further cooperation.
Clarifying Calendar
Thanks to the information in the Revised GHG Strategy, there was already some clarity on the timeline up to the points of agreement/adoption in 2025. However, the meeting has clarified both an expert workshop (on the modelling and analysis base of the measures), and the agenda for the next IMO Working Group meeting (late September), which has been setup to advance the substance and detail in the new MARPOL Chapter 5 drafting.
Wait and See Approach
Although the direction of shipping’s transition was primarily set at MEPC 80 with the Revised GHG Strategy, any transition creates uncertainty and risk relating to timing. Investors in the assets (the fleet, infrastructure such as ports, energy supply chains) that enable both the incumbent fossil fuel paradigm, and that will be needed in the future zero GHG emission paradigm, face both technology risk (uncertainty about which zero emission technology will be most competitive and when), and political risk (uncertainty about exactly how policy will disincentivise fossil fuels and incentivise zero emission fuels).
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Source: Safety4sea
