EU has to fall in line with IMO for regulatory harmony – IMO chief

EU regulations on shipping emissions must follow IMO regulations, not the other way around, the International Maritime Organisation’s (IMO) Secretary-General Arsenio Dominguez told ENGINE at a press conference at IMO headquarters in London.

PHOTO: IMO Secretary-General Arsenio Dominguez speaking at the IMO headquarters in London on 18 March 2024. Erik Hoffmann

A lot of bunker buyers, traders and suppliers are grappling with the complexity of recently implemented and impending EU regulations on shipping emissions and marine fuels, including the EU ETS and FuelEU Maritime.

Emission factors and calculations have presented new challenges to shipowners, managers and bunker industry participants that have been used to trading 2-3 fuel grades. They now have to consider a plethora of alternative fuels and energy efficiency measures.

You could argue that the IMO was first out of the greenhouse gas (GHG) regulation blocks with its Carbon Intensity Indicator (CII) from last year. But as CII lacks any hard penalties for non-compliance, it is EU regulations coming into force from this year and next year that feature most prominently on the radars of those trading in the EU.

The EU has seemingly moved at breakneck speed to regulate GHG emissions from shipping, while the more heavyweight global shipping regulator IMO has previously been called a laggard on the environment by some. That was before last summer, when the IMO had a breakthrough moment in adopting a net zero GHG target for shipping "by or around 2050". On the road to that mid-century target there are waypoints of 20-30% GHG reductions by 2030 and 70-80% reductions by 2040. These targets will be reached through so-called mid-term measures.

Several pieces of potential mid-term measures are up for debate at the IMO this week. Discussions and decisions are widely expected to lead to one economic measure, like a GHG levy or a feebate of some kind, and a technical measure, which is shaping up to be a GHG fuel standard.

With the EU ETS cap-and-trade system for CO2 emissions already in place for EU-linked voyages from this year, will it influence the way that the IMO devises its economic measure?

IMO Secretary-General Arsenio Dominguez said he wouldn’t call it an influence. But he acknowledges that the IMO is made up of EU member states, which will bring their experience and expertise to the table on how EU regulations have worked in practice. This can help the IMO to implement measures, he argued.

Could there be a harmonisation of regional and global regulatory regimes on the cards then, or is further fragmentation more likely, with the EU and US going their own ways?

“I would always continue to call for global regulations for a global sector. And I have been very open, including with the European Union, the European Commission, that I expect that we will only end up with one global regulation,” Dominguez said.

Shipowners and managers looking to navigate the energy transition sensibly have had to crunch a lot of numbers. FuelEU Maritime, for example, is a very technical regulation and some would argue that once the industry has gotten used to one set of rules and calculations already in place, while another set of rules and regulations is impending, it makes sense to harmonise the two systems.

“We develop the global ones. The EU has developed a regional one. If anything, theirs needs to align with global regulations, not the other way around. We get experience from the implementations of all the other measures either at national or regional level. But we need to focus on the 176 member states and how it is harmonized and applicable to all of them, and for the benefits of all of them,” Dominguez said.

A regional GHG fuel standard is coming into force in less than 10 months, with the EU’s FuelEU Maritime regulation on the GHG intensity of energy used onboard ships. The IMO’s mid-term measures are not due for adoption and implementation just yet, so unless FuelEU Maritime gets delayed there will inevitably be a period with a regional GHG fuel standard in place, and without a global one.

“The timeline is in the strategy, finalising the technical and economic measures by the end of next year… So adoption by next year, entering into force in 2027,” Dominguez said.

This is the earliest timeframe possible now as there needs to be a gap of 18 months between adoption and implementation of these measures for them to be in accordance with international law.

“That’s the plan that was agreed last year in the strategy, and I’m not deviating from that,” he said.

The IMO is expected to finalise a revised set of guidelines this week for marine fuels' GHG intensities across their lifecycles. These lifecycle guidelines will allow energy and shipping firms to calculate well-to-tank (production and distribution) and tank-to-wake (consumption) emission factors for the various marine fuels they work with or consider.

By Erik Hoffmann

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