Lloyd’s Register (LR)’s Regulatory Affairs experts have provided an analysis of the main outcomes from the IMO ISWG-GHG 19 meeting on mid-term GHG measures.
The Intersessional Working Group on Reduction of Greenhouse Gas (GHG) Emissions from Ships (ISWG-GHG 19) met for its 19th session from 31 March to 1 April 2025. According to LR, IMO has advanced its GHG emissions, with significant developments emerging from the meeting. Putting the meeting’s outcomes under the scope, LR notes the following:
Proposal for tiered GHG fuel intensity requirements
A key development saw the Chair present a text which proposes a system of tiered GHG Fuel Intensity requirements for ships. Under this proposal, vessels must meet a direct compliance target for their GHG intensity or balance any non-compliance through a two-tier system of purchasing or transferring compliance units. This text notably removes a previously proposed flat rate contribution or levy as the primary economic element.
Compliance units and economic mechanisms
The proposal includes the possibility of transferring and banking surplus compliance units and the establishment of an IMO GFI Fund to manage finances generated by the scheme. Furthermore, the text introduces provisional thresholds for zero or near-zero GHG fuels. The proposed framework anticipates data collection commencing on 1 January 2028, with the first data verification and compliance assessment in 2029.
Ongoing negotiations on compliance costs
Despite this progress, negotiations on compliance unit costs are ongoing, with many proposals still being discussed. The proposed text would require ships to reduce their GHG intensity through to 2050, meeting base and direct compliance targets. Ships exceeding direct compliance would earn surplus units for transfer, banking, or cancellation. Conversely, those with deficits would need to use surplus units or buy remedial ones, with different prices proposed for differing tiers of compliance deficit. A key incentive within the scheme aims to encourage the adoption of very low GHG emissions fuels and technologies.
Challenges and points of contention
However, achieving consensus among Member States remains a significant challenge. Considerable work is still needed to refine the text, with Small Island Developing States (SIDS) expressing disappointment in the current proposals. The largest points of contention revolve around the inclusion of a standalone economic contribution or levy, the specific reduction trajectories, the prices for remedial units, and potential exceptions for ships serving ports in SIDS and Least Developed Countries (LDCs).
Next steps and timeline for adoption
The next crucial step will be at MEPC 83, meeting next week (7-11 April), where Member States will further negotiate the proposed text with the aim of final agreement by 11 April. The intention is to adopt the finalised regulations at an extraordinary session of MEPC in October 2025, leading to a potential entry into force in March 2027.
Industry implications and future outlook
The coming days will be critical for IMO Member States to bridge their differences and reach a consensus on the regulatory text. The maritime industry faces significant adjustments as these mid-term measures progress towards adoption and entry into force, impacting fuel choices, technology adoption, and operational practices, LR concludes.
