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, including these goals. 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 - existing and upcoming

Current measures addressing GHG emissions include three mandatory requirements:

  • The Energy Efficiency Design Index (EEDI)for newbuilds mandating up to 30% or more improvement in design performance depending on ship type and size
  • The Ship Energy Efficiency Management Plan (SEEMP) for all ships above 400 GT in operation – although it contains no explicit and mandatory requirements to content and implementation
  • The Fuel Oil Consumption Data Collection System (DCS) mandating annual reporting of CO2 emissions for all ships above 5,000 GT. 
  • At MEPC 76 that took place from 10 to 17 June 2021, three additional measures were adopted, affecting all existing cargo and cruise ships, with entry into force on 1 January 2023.
  • The retroactive application of the EEDI to all existing cargo and cruise ships above a certain size, known as the Energy Efficiency Design Index for Existing Ships (EEXI). This will impose a requirement equivalent to EEDI Phase 2 or 3 (with some adjustments) to all existing ships regardless of year of build and is intended as a one-off certification. The EEXI is to be verified by the Administration and a new IEEC issued no later than the first annual survey on or after 1 January 2023. 
  • A mandatory Carbon Intensity Indicator (CII – e.g. Annual Efficiency Ratio [AER – grams of CO2 per dwt-mile]) and rating scheme where all cargo and cruise ships above 5,000 GT are given a rating of A to E every year. For ships that achieve a D rating for three consecutive years or an E rating, a corrective action plan needs to be developed as part of the SEEMP and approved. The key decision at MEPC 76 was the establishment of reduction factors for the CII. With 2019 as the base year for the reference lines, the reduction rates were set to 1% per year for 2020-2022, followed by 2% per year for 2023-2026. The rates for 2027-2030 will be decided as part of the review to be concluded by 1 January 2026.
  • A strengthening of the SEEMP (Enhanced SEEMP) to include mandatory content, such as an implementation plan on how to achieve the CII targets, and making it subject to approval. Verification and audit requirements for the SEEMP will only apply to ships above 5,000 GT subject to the CII requirements.

These new requirements for existing ships will be reviewed by the end of 2025, with particular focus on the enforcement of the carbon intensity rating requirements.

In addition to the upcoming EEDI Phase 3, a Phase 4 is likely to be introduced later this decade, further tightening requirements for newbuilds.

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. MEPC 76 recognized the urgent need to progress the establishment of mid- and long-term measures and agreed on a working plan to this end. The work will include consideration of MBMs (market-based measures), as well as further discussion on measures to catalyze a fuel transition, including a potential GHG footprint requirement for fuels.

Related links

New GHG regulations for ships approved during IMO MEPC 75 meeting

Read our statutory news (Nov 2020)

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