Overlap of IMO and EU regulations could lead to regulatory chaos – DNV
Shipping is poised to face "a complex rest of the decade", when the IMO's mid-term measures will overlap the EU’s FuelEU Maritime regulation, said DNV’s director of marine environment, Eirik Nyhus at a recent webinar.
PHOTO: IMO member state delegates at the opening day of MEPC 81 in London. IMO
The International Maritime Organization's (IMO) future regulations will be "layered" on top of the EU's FuelEU Maritime and EU ETS regulations.
The EU ETS for shipping came into effect from this year and FuelEU Maritimewill come into force next year. Under the FuelEU Maritime, ships will be required to gradually decrease the GHG intensity of the energy they use, starting with a 2% drop by 2025 that is scaled up to 80% by 2050.
On the other hand, the IMO is expected to adopt mid-term measures in March next year, with implementation anticipated in 2027. Two mid-term measures are expected, including one technical measure such as a global fuel standard and one economic measure such as GHG levy. These measures will be more practical follow-ups to the GHG targets that IMO has already set for 2030 and 2040 in its revised GHG strategy.
If the IMO sticks to its timeline, then shipowners and operators will have to comply with both the international regulations and the EU's regional regulations simultaneously from 2027 onwards, Nyhus explained.
He highlighted that the IMO regulations are likely to have different targets and requirements than the EU’s regulations because of the involvement of multiple nations with differing views.
For instance, proposals from the EU and China submitted to the shipping regulator saw the most traction at IMO’s 81st Marine Environment Protection Committee (MEPC 81) meeting. The EU suggested that a GHG fuel standard must be calculated on a well-to-wake (WtW) basis. China proposed a more lenient tank-to-wake (TtW) approach, with some additional sustainability criteria. Both EU and China’s proposals were based on IMO’s life cycle assessment (LCA) guidelines.
Nyhus argued the IMO might lean towards a TtW basis of calculation because most countries have their own regulatory requirements for fuel production on land, which they may prefer to exclude from maritime considerations.
The island nations and least developed countries proposed a fixed carbon levy at $150/mt. The EU supported a slightly flexible carbon tax based on lower prices. Meanwhile, some South American nations, China, India, Southeast Asian and African countries opposed the implementation of a carbon tax.
ENGINE pointed out the overlap in global and regional regulations during its interactions with the IMO chief. EU regulations on shipping emissions must follow IMO regulations, not the other way around, the IMO Secretary-General Arsenio Dominguez told ENGINE at a press conference at IMO headquarters in London.
“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.
DNV’s Nyhus noted that the IMO would find it difficult to reach a consensus quickly with such fundamental differences, and some countries would have to make serious compromises.
Interaction between the IMO's global and the EU's regional shipping regulations could create a regulatory quagmire for shipowners and operators in the next decade, he concluded.
By Konica Bhatt
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