ICS and IBIA propose energy pooling compliance mechanism for IMO’s GHG fuel standard

The International Chamber of Shipping (ICS) and the International Bunker Industry Association (IBIA) have jointly submitted a proposal to the International Maritime Organization (IMO) for what they describe as a simplified global greenhouse gas (GHG) fuel standard.

The 2023 IMO strategy for the reduction of GHG emissions from ships identifies the development and finalisation of mid-term measures, including a goal-based marine fuel standard regulating the phased reduction of the marine fuel’s GHG intensity, and includes a target that between 5% and 10% of the energy used by shipping must be generated by 2030 from zero or near-zero energy sources.

A new suite of regulations should be adopted in 2025 to progressively reduce the GHG intensity of bunker fuels and create a market for the production of zero and near-zero GHG fuels.

In their proposal, the trade association that represents 80% of the global shipping industry and the bunkering industry body have set out draft amendments to Annex VI of the MARPOL Convention in terms of maximum permitted GHG intensity of marine fuels in 2030, to be followed by an aggressive tightening of this standard in 2040.

The joint proposal provides for a streamlined voluntary “energy pooling compliance mechanism” to address the possibility of fuel producers being unable to supply new fuels in sufficient quantities. 

“This will allow for ships to continue to trade should sufficient quantities of fuels of the required GHG intensity not be made available by energy producers, but without increasing the sector’s total GHG emissions,” ICS and IBIA said.

In July, the EU adopted its green fuel law for shipping, which will provide a voluntary pooling mechanism, under which ships will be allowed to pool their compliance balance with one or more other ships, with the pool – as a whole – having to meet the greenhouse gas intensity limits on average.

Commenting on the scheme, Simon Bennett, deputy secretary general of the ICS, said: “Our joint proposal provides flexibility to enable compliance by ships should fuels of the required GHG intensity not always be available. This simplified approach avoids the need for an overly complex system, as proposed by the European Union, whereby “compliance units” or “remedial units” would need to be registered with or purchased from a central IMO registry.”

The ‘simplified’ approach is also expected to minimise administrative burden for governments, especially for developing countries, whose support “will be vital to take the fuel standard forward globally”. 

“The proposed method of pooled compliance would be a private arrangement between shipping companies and would avoid unnecessary administrative burden for governments, including developing countries’ administrations whose support will be vital to move forward at IMO,” added Bennett.

Edmund Hughes, IBIA’s representative at IMO, said: “We fully agree with shipowners, as represented by ICS, that the design of the global fuel standard needs to be kept as simple as possible if, as identified by the 2023 IMO GHG strategy, governments wish to have a workable system in place within the next 18 months, that can be uniformly and consistently implemented and that keeps the administrative burden for bunker operators and suppliers to a minimum”.

The proposal will be considered by an IMO intersessional working group on GHG reduction in March 2024.