Regulatory overview

The IMO has an ambition to halve GHG emissions by 2050 and a vision to decarbonize shipping as soon as possible within this century. The initial IMO GHG strategy will be revised in 2023 and reviewed again every 5 years thereafter. The IMO is following a two-tier approach to implementing decarbonization measures, focusing first on a limited set of short-term measures, before embarking on more comprehensive medium- and long-term measures.

Short term measures

Current measures addressing GHG emissions include only two mandatory requirements

  • The Energy Efficiency Design Index (EEDI) for new builds mandating up to 30% improvement in design performance depending on ship types; and,
  • The Ship Energy Efficiency Management Plan (SEEMP) for all ships in operation – although it contains no explicit and mandatory performance requirements.

The IMO is on the verge of agreeing on and implementing the first tranche of additional GHG regulations, expected to enter into force in 2023. It is expected that the centerpiece of this package will be a combination of design and operational regulations. In combination with the upcoming EEDI Phase 3 and a possible Phase 4 later this decade, these measures will impact both new builds and existing ships.

The two key proposals for requirements for ships in operation are:

  • The application of the EEDI retroactively to all existing ships, known as the Energy Efficiency Design Index for Existing Ships (EEXI). This will impose a requirement equivalent to EEDI Phase 2 or 3 to all existing ships regardless of year of build and is intended as a one-off certification.
  • A strengthening of the SEEMP to include mandatory operational efficiency improvement targets, known as the Enhanced SEEMP. The intention is to mandate year-on-year operational efficiency improvements using so-called Carbon Intensity Indicators (CII) - e.g. Annual Efficiency Ratio (AER – grams CO2 per dwt-mile) or Energy Efficiency Operational Indicator (EEOI – grams CO2 per tonne-mile).

Medium- and long-term measures

While the proposed short-term measures should be adequate for reaching the 2030 goals, further measures, or increased stringency of the short-term measures, are needed to achieve the 2050 ambitions. The IMO has made the large-scale development and deployment of carbon-neutral fuels a core part of its long-term strategy. This is driven by the understanding that not only are these fuels essential for achieving the 2050 reduction goals, they are also the only practical way for shipping to achieve the ultimate vision of full decarbonization before 2100.

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