MMMCZCS reflects on elements of the ISWG-GHG 18 meeting

According to MMMCZCS, the global maritime industry continues its journey toward achieving net-zero emissions and in the recent ISWG-GHG 18 meeting were highlighted critical advancements and challenges in formulating mid-term measures (MTMs) for the reduction of greenhouse gas emissions from ships. 

Technical measures

While many elements of the technical measures still remain to be settled, MMMCZCS sees support for a robust GFS gradually increasing.

• Remedial unit (RU): The RU value determines the cost of failure to comply with the GHG intensity reduction requirements laid out in the MTMs. An RU value that is set too low will fail to incentivize uptake of zero- and near-zero-emissions (ZNZ) fuels and technologies. As covered in a previous edition of Countdown, MMMCZCS analysis indicates that a minimum RU value of 450 USD is needed to drive decarbonization in line with the IMO Strategy. After ISWG-GHG 18, it is more likely that the RU value will be set at this level or higher.
• GHG reduction pathway: The GHG reduction pathway determines the shape of the industry’s decarbonization trajectory – in other words, how much decarbonization is required by when. In contrast with the observations from MEPC 82, it was found that the reduction rates discussed at ISWG-GHG 18 were, at a minimum, moving towards the ‘base’ ambition levels laid out in the IMO Strategy. As a result, now there is greater likelihood that the reduction pathway in the final agreement will be sufficiently ambitious to deliver on decarbonization.
• Flexible compliance mechanisms: Flexibility mechanisms would allow vessels that reduce their GHG emissions to below the required level to trade their ‘surplus’ compliance with vessels that fail to meet the target. Center analysis has found that including the flexibility mechanism reduces both emissions and transition costs by incentivizing over-compliance, which can be purchased by vessels that cannot switch fuels. After ISWG-GHG 18, MMMCZCS still has medium-to-high confidence that some flexibility mechanism will be included in the MTMs.

Progress of economic measures

MMMCZCS pointed out that while there is consensus on the need for an economic measure in the MTMs, there was continued disagreement about whether the measure should be a levy. The number of countries supporting a levy increased during the most recent meeting, but there was also vocal opposition to the levy. However, a significant development at ISWG-GHG 18 was the introduction of a potential bridging proposal with an alternative revenue-raising economic measure (see more below), which was welcomed by many Member States.

The interest in including a bridging proposal shows a commitment across opposing camps to finding a solution that ensures stable and sufficient revenues. This progress is significant because revenues can be used to fund important initiatives, including support for ZNZ energy, fuels, and technologies; mitigation of potential adverse effects of the regulation; and support for climate mitigation efforts.

• ZNZ definition: MMMCZCS analysis of the proposals discussed at MEPC 82 noted a high level of ambiguity surrounding the definition of “zero or near-zero GHG emission technologies, fuels and/or energy sources” in the IMO Strategy. At ISWG-GHG 18, there were new and more detailed proposals for ZNZ definitions included in the draft legal text. A ‘strong’ ZNZ definition will better support green technologies that are scalable and can deliver on the GHG emissions reduction ambitions set in the strategy.
• Revenues distribution: Revenues distribution remains an area where Member States show divergent positions, and was observed little progress toward reaching a consensus on this issue during ISWG-GHG 18. Therefore, further discussion will be needed at future meetings.

With just a few weeks left before MEPC 83, we remain hopeful that Member States will come together to bridge positions and deliver on an equitable, ambitious pathway to decarbonization.

…said Mira Bergem, Public Affairs Manager, MMMCZCS.