MEPC 81: Lion’s share of countries throw support behind global GHG price for shipping

Regulation & Policy

March 22, 2024, by Naida Hakirevic Prevljak

As this week’s meeting of the International Maritime Organization’s Marine Environment Protection Committee (MEPC 81) winds down, a clear majority of developed and developing countries have supported a global greenhouse gas (GHG) price for shipping.

As informed, 34 countries, both developing and developed states from across the Pacific, the Caribbean, Africa, Europe and North America, expressed support in the meetings for a universal GHG price, e.g. a levy as a separate measure.

The Caribbean Island states, many of which spoke at IMO for the first time, helped to secure this majority.

On the other hand, fourteen countries continued to favor a weaker mechanism as part of other measures, as opposed to a separate, universal GHG levy.

This represents a huge increase in the number of supporters of a GHG levy since the last round of talks in 2023, while the opposing/less ambitious group remains roughly stable.

As a result, the IMO for the first time has agreed a draft outline of the legislative framework for an economic measure (GHG pricing) and a global fuel standard (GFS) that mandates a growing share of green energy used in ships, both via an amendment to the MARPOL treaty.

Two Caribbean Islands delegates to the IMO commented on the outcome of MEPC 81:

“Belize is a climate-friendly country that stands upon a firm commitment to protect 30% of its ocean spaces. No one can, therefore, question the sincerity of our decarbonization efforts at the IMO. Whereas we are delighted that the IMO adopted a revised GHG strategy last year, we continue to caution that a goal-based fuel standard alone will not be sufficient to achieve the ambitions of the 2023 GHG Strategy. Belize, therefore, supports, in addition to a GFS, a universal levy of $150/tonne of CO2e with a ratchet clause that would disincentive the continued use of fossil fuels and helps incentivize an early and rapid transition to zero/near zero emission fuels,” Major Lloyd Jones, Chairman of the Belize Port Authority and Head of Delegation for Belize, commented.

“We were delighted to have been joined by a substantial number of CARICOM member states at ISWG16/MEPC81 and we are humbled that they allowed Belize to coordinate our joint efforts. We have collectively agreed to remain engaged with the processes at IMO to ensure that a basket of measures is adopted, in good time, that truly provides for a just and equitable transition. That means that Caribbean perspectives must not just be heard but must be taken into full account.”

“The Caribbean Team also agreed to continue the work intersessionally to encourage attendance by all CARICOM member states and to develop strategies to strengthen our position, including coordinating with other SIDs and LDCs. Decarbonization of shipping is, first and foremost, about climate change. We can’t afford to let the world forget that!”

“The Grenada delegation’s presence at the MEPC-81/GHG negotiations is a testament to our leadership ambitions for our region and our profound dedication to protecting “Our Ocean” and our economic future. Our engagement underscores the critical urgency required to confront the distinctive challenges our region and other Small Island Developing States (SIDS) face due to climate change and various environmental threats. Through our advocacy, we aim to champion sustainable maritime practices that resonate with our overarching vision for a resilient and thriving Caribbean,” Jerry Enoe, Advisor, Blue Economy for the Government of Grenada, said.

” … We strongly advocate for the implementation of a universal levy of $150.00 USD per tonne of CO2 equivalent emissions, as proposed in Belize’s submission. We see this approach as the best way forward in the IMO GHG strategy to incentivize the shipping industry to reduce its GHG emissions. It would also generate the necessary revenue for the industry and all countries to transition to net-zero GHG emissions and address the consequences of climate change, to which the shipping industry has significantly contributed over the years.”

Clean Shipping Coalition: Support for pricing greenhouse gas emissions from shipping grows but important pieces of puzzle still missing

The Clean Shipping Coalition has welcomed the growing support for a GHG emissions levy but warned that IMO member states must also maintain focus on other key issues.

According to the coalition, issues such as the GFS and the improvement of how energy is used in ships via the carbon intensity indicator (CII) should also be the center of attention of the IMO member states.

“MEPC81 reaffirmed to us that countries clearly back a GHG emissions levy rather than weaker alternatives, which sends a strong signal for further developing the policy,” said Clean Shipping Coalition President John Maggs.

“However the IMO must not lose sight of the other, equally important measures, namely agreeing on a clean energy standard (GFS) and improving the energy efficiency of ships through the Carbon Intensity Indicator (CII). On the latter in particular, I was delighted to see IMO member states this week firmly reject the shipping industry’s attempt to downgrade the CII rules. This is a good omen not just for the CII’s big moment at MEPC 82 this October, but the whole discussion on measures to deliver the 2023 GHG Strategy emissions reduction goals.”

“The UN is on the edge of adopting the world’s first-ever global emissions price, but the policy will only be as successful as countries make it to be”, Sandra Chiri, Shipping Manager, Ocean Conservancy, pointed out.

“The March talks at the IMO gave us hope that a clear majority of countries—the Caribbean, the Pacific, Africa, but also the EU and Canada—understand the huge opportunity of pricing shipping emissions for the industry’s clean transition and for making sure this transition benefits all developing countries.”

“It’s regrettable that a small but persistent minority strives to water down this vital climate measure, with a proposal of their own that we know is not ambitious enough. As the IMO negotiations move forward, I hope to see countries engage constructively in designing the future GHG price in a way that protects our oceans, livelihoods and the planet,” she added.

“The IMO agreed last year that some form of emission pricing is necessary to meet shipping’s climate commitments, and during these last two weeks we were pleased to see an overwhelming majority of countries backing a fully-fledged Greenhouse Gas emission price – i.e. a levy, with the Caribbean Island states in particular putting a new wind in the sails of this key climate policy,” Anaïs Rios, Shipping Policy Officer, Seas At Risk, noted.

“The Pacific Islands and Belize proposal for a levy of $150/tonne of GHG emissions is the most mature and ambitious proposal on the table, and we urge governments to work constructively over the summer ensuring it prioritises equity and fosters a just transition for all involved.”

“The IMO negotiations this week achieved a near consensus to move ahead with a global fuel law that will create demand for green fuels,” said Faig Abbasov, Shipping Director, Transport & Environment.

“However, the success of the fuel standard rides on proper accounting of emissions across the supply chain. Negotiators must take lifecycle emissions into account so that the likes of grey hydrogen, LNG and biofuels do not simply lead to one bad fuel replacing another. And a green fuels standard alone is not enough. Carbon pricing will ensure that polluters pay, while efficiency standards can ensure that ships start getting cleaner today, not just in 2050.”