IMO and the EU Emission Trading System (ETS) are leading shipping industry decarbonization efforts. IMO’s strengthened strategy targets 20-40% reduction by 2030, 70% by 2024, and 100% by 2025. ETS will price ship emissions from 2024.

To meet IMO’s net-zero strategy, investments in technology, sustainable practices, and alternative fuels are essential, albeit costly. Stakeholders should prepare and invest in these solutions for long-term competitiveness.

IMO

The IMO global shipping regulation represents a landmark effort to address the environmental challenges posed by the maritime industry. At its core, this initiative seeks to curtail carbon emissions and enhance energy efficiency within the realm of ocean freight. Its overarching goal is to usher in a more sustainable and eco-conscious era for global shipping.

The IMO’s 2023 Revised GHG Strategy has three key goals: reducing carbon intensity in international shipping by at least 40% by 2030, increasing the use of zero or near-zero GHG emission technologies to 5-10% of energy by 2030, and achieving net-zero GHG emissions by around 2050. Checkpoints for 2030 and 2040 aim for 20-30% and 70-80% total GHG reduction, respectively.

To enforce these goals, MARPOL introduced measures like EEDI for energy-efficient ship design, SEEMP for operational efficiency, EEXI for existing ships, DCS for CO2 reporting, and CII for performance rating.

To meet these targets, IMO plans to implement technical and economic elements, including a marine fuel standard and GHG pricing, with adoption in 2025 and enforcement around mid-2027.

EU ETS

The EU ETS (Emissions Trading System) for shipping represents a significant step in the European Union’s ongoing efforts to combat climate change and reduce greenhouse gas emissions from maritime transport. This innovative initiative extends the principles of emissions trading, already applied to various other sectors, to the shipping industry, acknowledging the sector’s substantial contribution to global emissions.

The EU ETS is extending its scope to include shipping, starting in 2024, pending final approval. Commercial vessels with over 5000 GT operating within the EU must obtain and surrender emission allowances for CO2 emissions.

The EU ETS is a cap-and-trade mechanism reducing emissions annually, aligned with the EU’s 55% emission reduction target by 2030 and climate neutrality by 2050. Companies within the EU/EEA must surrender emission allowances for their GHG emissions from 2024. Shipowners, managers, or charterers responsible for vessel operation, under ISM Code guidelines, are affected. The EU MRV system will update to cover GHG emissions, ship types, and sizes.

Initially, the EU ETS covers CO2 emissions, with methane (CH4) and nitrous oxide (N2O) added in 2026. Emissions from voyages within and to/from the EU/EEA fall under the EU ETS, with a phased approach from 2024 to 2026.

Companies must register, verify reporting plans, and report emissions. Non-compliance leads to penalties, including expulsion from EU trading. Biofuels meeting sustainability criteria receive zero CO2 emissions factors. Emission allowances are obtained through auctions, with revenues supporting shipping-specific projects via an Innovation Fund. Companies subject to the EU ETS should prepare for updated monitoring and reporting.

Link to ETS market : https://carboncredits.com/carbon-prices-today/

Accredited Emission Calculations

Emission calculation accreditation is vital in the intermodal supply chain to ensure emission data accuracy and credibility. Accredited calculations provide transparency, compliance with regulations, and trust among stakeholders and is a requirement to enable the intermodal supply chain to reduce environmental impact effectively.

Greensee methodologies comply to the GLEC framework, meet the EN 16258 standards, and are aligned with various aspects of the forthcoming ISO 14083 standards. Full compliance with the ISO standard is expected in early 2024.