IMO climate agreement and shipping

Priority: The shipping sector must meet IMO climate objectives

Shipowners:

“The international maritime climate accord is being proactively embraced by Dutch shipowners. Medium-term measures are needed to achieve the 2030 and 2050 targets.”

The KVNR is holding talks with various relevant parties (government, technical suppliers, banks, ports and shippers) to see how the shipping industry can further reduce emissions of CO2 and other greenhouse gases. The aim is to set up concrete partnerships and put them into practice.

KVNR - Nick Lurkin - Klimaat en Milieu - web
Contact

 

Nick Lurkin
Climate and Environment

+31 10 2176 275
lurkin@kvnr.nl

KVNR - Nathan Habers - Public Relations, Crisisco├Ârdinatie en Geopolitiek - web
Press inquiries

 

Nathan Habers
Head of Communications & Pulic Affairs


+31 10 2176 264
habers@kvnr.nl

Context

On 13 April 2018, the international community in the International Maritime Organization (IMO) had already agreed on a climate deal for the maritime sector. This had the following objectives:

  1. The further tightening of the existing Energy Efficiency Design Index (EEDI) standards. As a result, more and more energy-efficient new-build ships are entering service.
  2. The transport performance per ship (e.g. CO2 emissions per tonne-kilometre) reduces by an average of 40% by 2030 compared to 2008. By 2050, the target is a 70% reduction.
  3. An absolute greenhouse gas reduction of at least 50% by 2050 compared to 2008, with the phase-out of greenhouse gases (including CO2) occurring as soon as possible in the second half of this century.

To achieve these reduction targets, the IMO’s strategy has been further strengthened and additional regulations have been in place since 1 January 2023. Since then, the IMO Strategy to reduce GHG emissions from ships consists of the following components:

  1. EEDI (Energy Efficiency Design Index): Requires an indication of the expected energy efficiency performance of a new ship to be reported.
  2. EEXI (Energy Existing Ship Index): Requires an indication of the expected performance of an existing ship in terms of energy efficiency.
  3. CII (Carbon Intensity Index): Required to calculate annual operational and energy requirements. Based on the outcome, the ship is rated with a label ranging from A to E (A = Very Good, E = Very Poor).
  4. SEEMP (Ship Energy Efficiency Plan): Document consisting of four parts:
  • The method used to calculate the CII score;
  • Annual operational and energy requirements;
  • Implementation plan on how annual operational and required energy requirements are met and;
  • Self-evaluation and improvement plan.

A ship that has a D or E score on CII for three consecutive years must also include corrective future actions to achieve a higher CII score.

The challenge

To achieve the ambitious – but realistic – reduction targets, it is important that all stakeholders take responsibility. Shipowners are partly dependent on other parties in the logistics chain; they provide a ship, but often it is the client of the transport by sea (e.g. a shipper or charterer) which determines how efficiently a ship sails.

In addition, a lot of work is being done to develop alternative fuels and new (propulsion) technologies. Developments to reduce and eventually phase out CO2 and other exhaust emissions are becoming more definite or are already being implemented. With regard to these innovations, the challenge lies in their large-scale availability for any ship type or size. Also, the investment for shipowners is considerably high.

Global measures should be easy to implement in practice and, where safety is not an issue, there is the right balance between greenhouse gas reductions and the associated costs. However, it has been found that not all regulations are easily implementable in practice. Some cases are financially unfeasible or have not worked in practice during implementation.

In addition, global measures should prevent market distortion between differently flagged vessels, different vessel types and the shift to other modes of transport. If shipping becomes unattractive due to laws and regulations, shifting to other (more CO2-intensive) modes of transport is the alternative. This must be avoided.

State of play - 10 October 2023

On 7 July 2023, the 175 member states of the IMO reached a historic agreement to reduce greenhouse gases from international shipping. At the 80th meeting of the Marine Environment Protection Committee (MEPC), it was decided that ‘in or around’ 2050 net zero greenhouse gas emissions should be achieved on a ‘well to wake’ basis. The Royal Association of Netherlands Shipowners (KVNR) is positive about this outcome.

Besides the greenhouse gas phase-out, two interim ‘checkpoints’ with reduction targets have been agreed. By 2030, the aim is to achieve a 20% reduction in absolute emissions compared to 2008; by 2040, this should be at least a 70% reduction compared to 2008.

The use of low-carbon and carbon-free fuels/energy sources should be at least 5% by 2030, but with a ambition of 10%. To meet these and the above targets, underlying measures related to fuels will be further elaborated and discussed over the next 18 months. This could include a fuel standard complemented by an economic measure, such as a fuel levy. According to the agreements made, the date of entry into force of this should be spring 2027.

In addition, the KVNR office is in ongoing discussions with various relevant parties (government, technical suppliers, banks, ports and shippers) to identify how the shipping industry can further reduce emissions of CO2 and other greenhouse gases. Indeed, it is important to establish what the parties can do for each other to achieve this.

As such, the KVNR organises and participates in ongoing roundtable discussions with ports and shippers. These talks are about jointly improving the carbon footprint of shipping operations. The aim is to set up a number of concrete partnerships and put them into practice, as in the case of the Maritime Master Plan.

In the short term, the KVNR is committed to a targeted approach, whereby shipowners can decide for themselves what measures (both technical and operational) they will take on board to meet the relative CO2 reduction target of 40% in 2030 compared to 2008. It is essential that the targeted approach of shipowners is both verifiable and enforceable.

Subsequently, one of the KVNR’s objectives is to determine as quickly as possible which alternative fuels/energy carriers are suitable for the various ship types and markets (coastal versus intercontinental shipping). R&D and pilot projects will be used to find out which new techniques, alternative fuels and/or energy carriers are suitable for low-CO2 or CO2-free shipping. An international maritime sustainability fund could contribute to this by means of a climate levy on shipping fuel whereby the ‘polluting operator’ pays and the ‘green operator’ is rewarded. A global level playing field is crucial here.