ISWG-GHG 18 Sees Progress On Mid-Term Measures For Shipping’s GHG Emissions

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Following the intense negotiations at ISWG-GHG 18 in London, experts are reflecting on the key developments surrounding mid-term measures (MTMs) for reducing greenhouse gas emissions from shipping, reports Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping.

Sustainable Marine Energy 

Experts at ISWG-GHG 18 discussed technical and economic measures to reduce shipping’s greenhouse gas emissions, reflecting on progress since MEPC 82. These measures are designed to work together to incentivize the shift to sustainable marine energy and achieve net-zero goals.

  • Overall: Support for a strong Goal-Based Fuel Standard (GFS) is growing, despite remaining technical details.
  • Remedial Unit (RU): The RU value, which determines the cost of non-compliance, is crucial for driving the adoption of zero- and near-zero-emission (ZNZ) fuels and technologies. Experts believe a minimum RU value of USD 450 is increasingly likely to be adopted.
  • GHG Reduction Pathway: The discussion regarding reduction rates has shifted towards the IMO Strategy’s “base” ambition levels, increasing the likelihood of a sufficiently ambitious decarbonization trajectory.
  • Flexible Compliance Mechanisms: These mechanisms, which allow vessels to trade surplus compliance, are expected to reduce emissions and transition costs. There’s medium-to-high confidence that they will be included in the final measures.

New Solution 

At ISWG-GHG 18, Singapore proposed a two-tiered Goal-Based Fuel Standard (GFS), introducing a new approach to revenue collection.

  • Standard GFS: Vessels exceeding the annual GHG intensity limit pay for non-compliance by purchasing Remedial Units (RUs) or Surplus Units (SUs) from compliant vessels, incentivizing sustainable fuel use.
  • Two-Tiered GFS:
    • A second, lower GHG intensity pathway is added.
    • Vessels between the two pathways purchase a less expensive RU (RUlower).
    • Vessels exceeding the higher pathway purchase a more expensive RU (RUupper).
    • Revenue from RUlower can be used like revenue from GHG pricing mechanisms (e.g., a levy).

This two-tiered system aims to make compliance more financially feasible for shipping operators while still generating funds for decarbonization efforts.

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Source: Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping