ICS Clamps Down on Efficiency Indexing of Individual Ships

The International Chamber of Shipping (ICS) voiced its fierce opposition to the concept of mandatory operational efficiency indexing of individual ships as a possible candidate measure for CO2 reduction.

In its latest publication titled Reducing CO2 Emissions to Zero the ICS argues that mandatory indexing of ships would lead to serious market distortion. The document has been published with the aim of endorsing the recent adoption of decarbonization strategy by the UN International Maritime Organization (IMO).

As agreed, the strategy targets an efficiency improvement of least 40 pct across the fleet compared to 2008, and a 50 pct cut of the sector’s total greenhouse emissions by 2050, regardless of future trade growth.

However, the IMO is yet to ascertain which measures should be taken to achieve the reduction goals.

“We now expect discussions at IMO to begin in earnest on the development of additional CO2 reduction measures, including those to be implemented before 2023. ICS will continue to participate constructively,” ICS Chairman Esben Poulsson explained.

According to ICS, the most controversial among the possible candidate measures is further consideration of applying some kind of Market Based Measure (MBM) to international shipping.

” ICS remains deeply sceptical of MBMs as a means of further incentivising CO2 reduction. Fuel is already by far the largest cost for shipowners (far greater than the capital costs of owning a ship) and this is expected to increase dramatically as a result of the global IMO sulphur cap which will take effect in 2020,” the organization said.

“Shipowners already have all the incentive they need to explore every possible means of reducing their CO2 emissions through technical and operational measures alone, as demonstrated by the impressive fuel efficiency improvements achieved since 2008.”

Should IMO decide to develop an MBM, the ICS said that the industry would prefer to pay a bunker fuel levy to some kind of IMO climate fund, which would direct  some of the funds to support research into new low carbon technologies or to support the rollout of the new bunkering infrastructure, particularly in the ports of developing nations.

The chamber added that it had been frustrated by the European Union’s decision to pre-empt the IMO discussions by proceeding with the implementation of its regional system for collecting data on individual ship emissions with the EU Regulation on the Reporting, Monitoring and Verification (MRV) of CO2 emissions.

ICS and ECSA have urged the EU to align its MRV Regulation with the global CO2 Data Collection System (DCS) that has been established by IMO and which will be up and running by 2019.

The chamber further insisted that DCS should be simple for ships to administer and primarily be based on fuel consumption. In addition, data relating to fuel consumption should be anonymous as agreed under the IMO system.

According to ICS, the EU MRV Regulation uses different metrics to those agreed by IMO and the EU verification and certification method is overly complex, causing an additional administrative burden for ship operators.

“But the greatest concern about the EU MRV Regulation is that commercially sensitive information will be published annually by the European Commission, along with ship name and company identifiers. This is with the intention of facilitating comparison of the supposed operational efficiency of individual ships – which is very likely to be inaccurate,” ICS pointed out.

The EU Regulation is meant to be fully implemented during 2018, one year before the IMO DCS.

ICS emphasized that nothing less than full alignment with the IMO DCS would be regarded as acceptable and that partial alignment would be seen as ‘bad faith’ by those non-EU States which had been encouraged to agree to the IMO system on the understanding that the EU would then fully align its unilateral regulation.

“It appears that the European Commission has no intention of recommending full alignment with the IMO system. Rather it is simply trying to identify what changes are necessary to make the EU regime compatible with that agreed by IMO,” ICS said.

“Unpalatable as this might be, this will probably require an acceptance by industry of the political reality that there will be two different reporting systems with different approaches to the verification of ship data. However, ICS intends to maintain its strong objection to the publication by the Commission of data about individual ships, an objection which is shared by a number of non-EU Member States. ICS will also continue to oppose the development of any system of mandatory operational efficiency indexing that may be considered at IMO.”