With concrete action awaiting to lay out the path to decarbonize maritime emissions, Patrick Verhoeven, managing director of the IAPH, and Jutta Paulus, member of the European Parliament and rapporteur for the revision of the EU emissions reporting regulation, discussed setting out rules and mutual expectations.

“Well, what we have been doing worldwide so far is like the game Mikado, whoever moves first, loses,” said Jutta Paulus, member of the European Parliament comparing efforts to agree on global regulations to reduce emissions in maritime to a game of pick-up sticks, popular in Paulus’ native Germany. The game requires one to remove sticks from a pile without causing disturbance to the others.

“And that is obviously not the correct way to address the crisis,” she warned. Paulus is deeply ingrained in this topic as she, within the parliament is a member of the committees on Environment, Public Health, and Food Safety; Industry, Research and Energy; and Transport. She is also the EU rapporteur for the revision of the monitoring, reporting, and verification regulation (MRV) , the EU’s maritime emissions and fuel usage report system.

“If anyone said to me, why don’t we bring in a global carbon tax, which is negotiated on the IMO level and applied worldwide to every single journey, I would say, let’s do it tomorrow,” she said.

Countering the argument that the planned inclusion of maritime in the EU’s emission trading scheme (ETS) will cause a patchwork of regulations to adhere to, she said, “I don’t think that the EU will say, we won’t participate in any global measure because we like our ETS so much. I think if there was a measure that was actually working and where there are no loopholes, you would of course say well, great shipping is covered in this global measure so we can take it out of the ETS again.”

This might be relieving to hear for the maritime industry, but Paulus also made clear that there is not much desire from the other included sectors to have maritime be a part of the deal. “When the talk started about including maritime in the ETS, it was not yet clear whether shipping would be a siloed ETS or whether it would be included in the general ETS where power production industries are in. Those now say the avoidance cost in shipping is much higher than in power production, which will hurt us but not shipping,” she explained, adding that “if there was a global measure, the commission would also receive pressure from the industry to take out shipping again.”

Getting everyone on board

The managing director of the IAPH, Patrick Verhoeven, agreed that it is good to have front running regions such as Europe who move ahead. “And I must say, I am very pleased to hear that potentially, once there is a global instrument, we would withdraw shipping out of the ETS again. I think that’s a good incentive to make progress at a global level.”

The above article is an excerpt from the cover interview of Ports & Harbors magazine, September/October 2021. Ports & Harbors is the membership publication of the International Association of Ports & Harbors.

Jutta Paulus has been a German member of the European Parliament for the Greens/European Free Alliance since July 2019. Before, she worked in quality management and controlling in laboratories and hospitals. Paulus holds a bachelor of pharmacy from the Philipps-Unversität of Marburg, Germany.

Patrick Verhoeven is the managing director of the International Association of Ports and Harbors (IAPH), responsible for policy and strategy. The organisation represents about 170 ports and some 140 port-related businesses in 90 countries worldwide. Prior to joining IAPH in 2017, Patrick spent twenty-four years in Brussels representing the interests of shipowners, port authorities, terminal operators and ship agents at EU level. He started his career in 1991 with the Antwerp-based ship agent Grisar & Velge. Patrick holds a PhD in applied economics and a bachelor’s in law from the University of Antwerp.

Resource: S&P Global Market Intelligence 

IMO’s MEPC has reiterated its commitment to review and strengthen the IMO Initial Strategy on the reduction of GHG emissions from shipping, with a view to adopting a revised strategy in mid-2023.

However, the agreement to establish the International Maritime Research Board (IMRB) and the proposed $5 billion International Maritime Research Fund (IMRF) was not achieved at MEPC 78.

The adoption of the industry-financed and IMO-led R&D fund has been seen as a key step to accelerating the development of technologies for zero-carbon shipping.

Under the proposal made in 2019, the core funding would be collected over a ten-year period via a mandatory $2 R&D contribution per tonne of fuel oil purchased for consumption. The fund would be supervised by the IMO.

Following the conclusion of last week’s meeting, the International Chamber of Shipping (ICS), representing 80% of the world’s merchant fleet, issued a statement.

“By refusing to take forward the shipping industry’s proposed research and development fund, the IMO has wasted its opportunity to kick start a rapid transition to zero-carbon technologies which will be vital if we are to decarbonise completely by 2050,” Guy Platten, ICS Secretary General, commented.

“Despite the support of many IMO States, we have been frustrated by short-sighted political manoeuvring which has led to the proposal in effect being killed. The signal this sends means that the financial risk associated with green investment will remain high, slowing down efforts to switch to zero-carbon fuels as soon as possible.”

“Some claimed that the fund was a market-based measure and did not go far enough, deliberately misinterpreting our intention. The fund was never presented as a carbon pricing measure, which, although being an additional measure which we also fully support, is politically far more complex and will take many more years to develop. If governments had shown the political will, the separate R&D fund could have been up and running next year, raising billions of dollars from industry at no cost to governments,” Platten added.

“Despite the lack of government leadership at the IMO, the shipping industry remains committed to finding ways of achieving net zero carbon emissions by 2050.”

“In addition to providing half a billion dollars per year to support global R&D programmes, the fund would have provided $50 million per year to support maritime greenhouse gas reduction projects in developing countries – a ten-fold increase to the current IMO technical cooperation budget. Sadly, it seems this opportunity to provide immediate help to the likes of Small Island Developing States has also now been lost,” Simon Bennett, Deputy Secretary General of ICS, added:

“On the positive side, the possibility remains for the IMO to make use of the fund’s proposed regulatory architecture to underpin a future global carbon levy on shipping’s CO2 emissions, to close the price gap with zero-carbon fuels when they become available and provide significant funds to help expedite the transition to net zero by 2050.”

“If the contribution system which we have developed can speed up implementation of a global carbon levy for shipping, we may yet be able to look back on this setback at the IMO as a significant moment of success.”

In view of the need to reduce greenhouse gas (GHG) emissions from the maritime sector, MEPC. 76 adopted comprehensive short-term measures including the so-called Energy Efficiency Index for Existing Ships (EEXI) and the Carbon Intensity Index (CII).  The goal is to enhance the energy efficiency of ships through the implementation of these measures.

EEXI is expected to be very similar to EEDI as it is based on the 2018 Calculation guideline of the EEDI, with some adaptations for existing vessels. EEXI describes CO2 emissions per cargo ton and per mile for existing ships of 400 gross tonnage and above. It determines normalized CO2 emissions based on installed engine power, transport capacity and vessel speed. EEXI is a design index, not an operational index. It is not related to readings from previous years and does not require onboard measurements; the index refers only to the design of the vessel.

On the other hand, CII represents an annual operational rating based on the required CII verification.  MEPC 76 agreed to establish a progressive, non-linear scale of CII reductions up to 1% per year until 2023, and then between 2023 and 2027, 2% per annum, and further CII reductions, until 2030, will be decided in the review by 2026.

Depending on the proximity, a rating is recorded in the vessel’s SEEMP to indicate the level of performance as A, B ,C ,D or E.

Vessels rating classification D for three consecutive years or E in one year will need to submit a corrective action plan to put forward how the objective CII would be achieved.

Note that 2030 is the year of the intermediate emissions reduction target set in the IMO’s initial strategy (IMO, 2018) to reduce CO2 emissions per transport work by at least 40% compared to 2008.

Operational carbon intensity

Attained and required annual operational carbon intensity indicator (attained annual operational CII).

After the end of calendar year 2023 and after the end of each following calendar year, each ship of 5,000 gross tonnage shall calculate the attained annual operational CII over a 12-month period from 1 January to 31 December for the preceding calendar year.

Within three months after the end of each calendar year, the ship shall report to its Administration, or any organization duly authorized by it, the attained annual operational CII via electronic communication and using a standardized format to be developed by the Organization.

The attained annual operational CII shall be documented and verified against the required annual operational CII to determine operational carbon intensity rating A, B, C, D or E, indicating a major superior, minor superior, moderate, minor inferior, or inferior performance level, either by the Administration or by any organization duly authorized by it, taking into account the guidelines developed by the Organization.

Corrective actions and incentives

A ship rated as D for three consecutive years or rated as E shall develop a plan of corrective actions to achieve the required annual operational CII.

The SEEMP shall be reviewed to include the plan of corrective actions accordingly, taking into account the guidelines to be developed by the Organization. The enhanced SEEMP (SEEMP III) shall be submitted to the Administration or any organization duly authorized by it for verification, preferably together with, but in no case later than 1 month after reporting the attained annual operational CII.

A ship rated as D for three consecutive years or rated as E shall duly undertake the planned corrective actions in accordance with the SEEMP III.

Administrations, port authorities and other stakeholders as appropriate, are encouraged to provide incentives to ships rated as A or B.

Attained energy efficiency existing ship index (EEXI)

EEXI regulation applies to existing ships of 400 gross tonnage and above. Vessels to which this regulation applies must calculate an EEXI value (i.e. attained EEXI) for each vessel and this value must be equal to or less than the maximum allowable value (i.e. required EEXI). In addition, if the achieved EEXI does not meet the required EEXI, the ship should take all countermeasures, such as: Shaft power limitation (SHaPoLi), engine power limitation (EPL), energy saving devices (ESV), etc.

The attained EEXI should be calculated in accordance with regulation 23 of MARPOL Annex VI and the 2021 Guidelines on the method of calculation of the attained Energy Efficiency Existing Ship Index (EEXI) – (resolution MEPC.333(76)) (EEXI Calculation Guidelines).

The 2013 Guidance on treatment of innovative energy efficiency technologies for calculation and verification of the attained EEDI (MEPC.1/Circ.815) should be applied for calculation of the attained EEXI, if applicable.

For verification of the attained EEXI, an application for a survey and, an EEXI Technical File containing the necessary information for the verification and other relevant background documents should be submitted to a verifier.

In cases of a major conversion of a ship taking place at or after the completion date of the survey for EEXI verification specified in regulation 5.4.7 of MARPOL Annex VI, the ship-owner should submit to a verifier an application for a general or partial survey with the EEXI Technical File duly revised, based on the conversion made and other relevant background documents. The verifier should review the revised EEXI Technical File and other documents submitted and verify the calculation process of the attained EEXI to ensure that it is technically sound and reasonable and follows regulation 23 of MARPOL Annex VI and the EEXI Calculation Guidelines. For verification of the attained EEXI after the major conversion, speed trials of the ship may be conducted, as necessary.

Ships affected by EEXI must demonstrate compliance at their next International Air Pollution Control Certificate (IAPPC) survey (annual, intermediate or renewal) or at the initial survey before the ship is put into service to obtain an International Energy Efficiency Certificate (IEEC) issued on or after January 1, 2023, whichever comes first. The effective date is November 01, 2022.

Conclusion

The shipping industry is a major contributor to global climate change, accounting for almost 3% of total CO2 emissions. This is sufficient for the implementation of IMO’s rigorous criteria. The maritime industry is under a lot of pressure to reduce CO2 emissions. Numerous studies are being conducted to increase the efficiency of this industry in order to mitigate the potential risks that may arise in the future.

The environment is the biggest winner. Due to the fact that the worldwide fleet renewal rate is so sluggish, regulating the energy efficiency of new vessels through EEDI is simply too slow to have an impact on total emissions.  Likewise, increasing regulatory pressure to improve the energy efficiency of new ships may reduce interest in renewing the existing global fleet. Existing and new ships are subject to the same regulations, leveling the playing field.

In 2023, the Carbon Intensity Indicator (CII) will be implemented alongside with the EEXI regulation. This indicator takes into account actual CO2 emissions from ship operations.

The IMO Marine Environmental Protection Committee (MEPC) has scheduled its 78th session from 6 to 10 June 2022, presenting an executive summary with more technical information and explanations on regulations regarding IMO GHG Strategy.