Ever since the early days of the UNFCCC in the late 1990s, dealing with greenhouse gas emissions from ships has been on the IMO agenda. This has resulted in increasingly demanding requirements such as the EEDI, the EEXI, the CII and the SEEMP. A strategy outlining the ambitions and how to achieve them was also agreed in 2023.
The IMO 2023 Strategy on Reduction of GHG Emissions from Ships outlines targets in the short, mid and long term. Short term is a relative target of improving energy efficiency by at least 40% by 2030 compared to 2008. The mid-term targets are a set of absolute indicative checkpoints leading to net-zero GHG emissions by or around 2050. The indicative checkpoints are suggested to be points on the trajectory from 2023 to 2050, with the 2040 checkpoint to be at least 70% below 2008 emissions, striving for 80%.
The strategy also envisages the ambitions being implemented by a technical and an economical measure without specifying in detail what those should be.
The IMO Net-Zero Framework (NZF)
Developing the mid-term measures to implement the strategy has been an ongoing process for many years. The strategy agreement in 2023, where the end goal moved from a 50% reduction by 2050 to net zero, focused member states’ attention and laid bare a need for drastic measures to be developed.
At the same time, the EU had developed the FuelEU maritime regulation building on a fuel GHG intensity metric and taking well-to-wake (WtW) emissions into account. EU countries injected the GHG Fuel Intensity (GFI) model into the IMO work to form the basis of the technical measure.
The IMO was already deeply engaged in the development of lifecycle analysis guidelines for certification of marine fuels according to their WtW emissions. This work is not yet finished but forms the bedrock for assessing a ship’s true emissions footprint.
Various models for an economic instrument had been injected into the IMO process. Ranging from EU ETS-like emissions trading schemes to flat levy and hybrids, etc. Some member states, notably the USA, had also strongly rejected any sort of a UN money collection scheme.
The work plan to finalise and adopt a set of mid-term measures was agreed, with the legal text to be approved by MEPC 83 in April 2025 and an extraordinary session of the MEPC (MEPC/ES.2) in autumn 2025 to adopt the measures – which could then enter into force by tacit acceptance procedure late in 2027. It was a rather ambitious timeline with no room for deviation, as the legal text requires the first monitoring year to commence on 1 January 2028.
The spring meeting was an interesting display of closed-door, late-night, multi-lateral negotiations between IMO member states. There were several camps with divergent views and motives fighting for their stance in the compromise being brokered. Without going into details (in part because the negotiations took place behind closed doors without observer organisations being allowed to participate), a compromise was agreed – but with some member states still in disagreement. It is also worth remembering that the USA was not present at the meeting.
We all know the outcome. Member States at the MEPC 83 voted to approve the draft legal text for circulation and for further adoption at MEPC/ES.2. Even at that time, a large number of states previously holding strong views on the issue abstained from voting. It can be argued that even at the time it was approved, support for the NZF was less than impressive.
Since MEPC 83 in the spring, the campaign by the USA had ramped up over the summer and in the weeks before the extraordinary MEPC meeting. It was clear going into the meeting on Tuesday morning last week that the atmosphere was tense.
The extraordinary session of MEPC (MEPC/ES.2)
Adoption of amendments to mandatory instruments is a standard agenda item for the MEPC. There are always adjustments of the legal text in MARPOL to be done, and these are usually not contentious. They are also always done in accordance with the procedure for tacit acceptance to provide for a well-defined and understood entry into force at a certain date no earlier than 16 months after adoption. This is a crucial element of providing certainty to the shipping industry on when new rules become applicable. We all know how uncertain entry into force is when it comes to new conventions with their explicit ratification requirements and thresholds of tonnage and number of states.
The NZF is not a small adjustment to MARPOL, nor is its content comparative to what is normally in MARPOL. The NZF sets far-reaching requirements on the use of fuels which are not readily available in the market, and which are likely to be very expensive compared to the fossil fuels presently used. It also introduces an economic element in the form of an NZF fund, which is expected to collect vast sums from the sale of remedial units to ships emitting more CO2eq than allowed by the GFI trajectory.
During the development of the NZF, several member states had expressed concerns about using MARPOL to introduce such an economic element, as it was seen to expand beyond the scope of the convention itself. Others were fine with using MARPOL for this purpose, and the IMO legal division had advised that it could be done in MARPOL subject to the party states’ decision.
The initial discussion of the NZF draft legal text for adoption at MEPC/ES.2 revealed stronger objections to adoption than had previously been heard. In addition, a proposal to use MARPOL’s explicit acceptance procedure for the adoption of the NZF was introduced. That proposal received support from many member states while others were adamant that the IMO should do as it always does: adopt subject to tacit acceptance.
This aspect of acceptance procedure is crucial to understanding what happened. The draft legal text is written with the tacit acceptance procedure in mind and contains hard dates starting immediately after the 16-month tacit acceptance period would have lapsed. Explicit acceptance, on the other hand, would have left the entry into force uncertain and likely much later than autumn 2027, if it happened at all. Equally, it is unclear whether and when individual requirements would enter into force if their stated application date were before the entry into force date. The potential of some of these requirements already having become retroactive by the date of entry into force could, in our mind, not be ruled out.
A vote on which acceptance procedure to use was never held. Although such a vote came close to happening, it was only “saved by the bell” after Saudi Arabia called for a motion to adjourn the meeting.
That vote to adjourn the meeting was held – after which we all went home, having decided that the coffee break would last for one year. And so this is where we now stand.
Where do we go from here?
We expect that a member state will ask the IMO Secretary General to circulate, with a view to adopt at MEPC 84 in the spring of 2026, the three “hostage” amendments to MARPOL Annex VI bundled with the NZF. This way, the amendments would not be left hanging in a vacuum awaiting the resumption of the MEPC/ES.2 one year from now. These are the Northeast Atlantic ECA, multi-engine operation protocols for Regulation 13 and changes to the schedule of the data collection system (DCS). These amendments are considered rather uncontroversial.
We expect that MEPC 84 will need to deal with arranging the continuation of MEPC/ES.2. This is because the dates in the draft legal text will already need to be changed due to the delay in adoption. If the other three bundled amendments are adopted at MEPC 84, they will need to be removed from the draft legal text before the continued MEPC/ES.2. There is also the issue of figuring out what can realistically be adopted in terms of the NZF itself.
In this regard, we find it essential that any modification of the NZF is done in such a way as to ensure that the tacit acceptance procedure is applied to its entry into force criteria once it comes to being adopted. At the time of writing, It is difficult to ascertain which modifications will be needed, but clearly, the economic element part is first in line to be reconsidered.
The most important thing to take away from this first part of MEPC/ES.2 may be more subtle than explicit. The meeting never decided on application of the explicit acceptance procedure instead of the tacit acceptance procedure. Applying the tacit procedure has been the norm of the organisation for the past 50 years when MARPOL or SOLAS have been amended.
Not taking a decision does not set a precedent.
A continued well-functioning IMO is of paramount importance to the global shipping industry.
And so BIMCO will continue supporting the IMO delivering global regulations for a global industry.
