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Preliminary Report from MEPC

Preliminary Report from MEPC
The highest profile matter addressed by the Marine Environment Protection Committee at its 60th Session in London in March 2010 continues to be greenhouse gas (GHG) reductions for the maritime transport sector.

Preliminary Report from the 60th Session of the IMO's Marine Environment Protection Committee

The highest profile matter addressed by the Marine Environment Protection Committee at its 60th Session in London in March 2010 continues to be greenhouse gas (GHG) reductions for the maritime transport sector. Significant debate occurred once again and the different views of developing countries (and their insistence to fully respect the principle of Common But Differential Responsibilities which is aimed to help developing countries build up their capabilities and facilitate the transfer of technology) versus Kyoto Protocol Annex 1 developed countries (and their position that any statutory instrument to be developed needs to embrace the No More Favorable Treatment principle that ships should be treated equally - consistent with all other IMO Conventions) were again made apparent with respect to the direction that IMO should take with respect to GHG discussions.
Despite those differences, there was unanimous agreement that IMO is the forum to determine direction/action that the maritime transport sector should pursue with respect to GHG reductions. During MEPC 60, GHG discussions focused on two primary issues:

1. Market Based Measures (MBM"s)
2. Energy Efficiency Design Index (EEDI) for new ships
Market-based Measures Expert Group
A majority of the Committee (this excluded China, Saudi Arabia, India) agreed that a group of experts would be established to undertake a study of the MBM"s proposed at MEPC 59 in July 2009 which was not further developed at MEPC 60. In particular,
Emission Trading - Cap and Trade Proposal. An emission cap is established for a certain period based on total emissions generated from the maritime sector. Ships would need to surrender allowances for the emissions they create and, if necessary, acquire allowances and credits from within the maritime sector or from other sectors (i.e., an open system as opposed to a closed system which would be limited to trading within the maritime sector only). The total amount of allowances issued for shipping would establish the cap. An international body, e.g., IMO, would be tasked to administer the scheme (distribute allowances, manage allowance registries for ships and monitor compliance). The cap could be periodically adjusted to suit environmental needs for the shipping sector. This proposal did not conclude on how credits would be allocated; either by free allocation (based on former emissions of individual ships) or by auctioning (participants purchase allowances based on their forecast demand during the trading period).

Bunker Use Levy Proposal

Building on the provisions of existing requirements in MARPOL Annex VI and on the existing International Oil Pollution Compensation Fund"s mechanism, this scheme is considered by some to be the simplest of the three proposals. It would require ships to purchase fuel at a registered bunker fuel supplier who would provide documentation, in the form of a bunker delivery note, that bunker fuel had been purchased and that the GHG contributions were paid. A central administrator (through the International GHG Fund) would maintain a global registry of registered bunker fuel suppliers, GHG contributions received, and separate accounts for each ship. Ships flying the flag of a non-Party would also be required to participate in the scheme in advance of calling at a port located within the jurisdiction of a Party. The downside of this scheme is that there may not be as much impetus for ships to improve their energy efficiency performance as opposed to an emission trading scheme.

Emission Trading ? with EEDI

This scheme establishes mandatory efficiency standards for new and existing ships. The Energy Efficiency Design Index, EEDI, would provide a means to measure and improve on the efficiency of all ships and allow ships to trade efficiency credits to comply with the efficiency standard. Account of ship type and size would mitigate problems encountered to date where certain vessel types/classes face unique emission circumstances while also avoiding inappropriate comparisons of large transoceanic vessels with smaller coastal feeders. Signatory States would establish specific reductions relative to the average efficiency of the world"s fleet as compared to the current average. Improved efficiency of individual ships in meeting the specific reductions would then be judged against the average efficiency for the relevant range of ship type/class and size. While this approach does not place a cap on emissions in the shipping sector, it does provide for definitive performance standards. The study would include an assessment of:

1. Environmental effectiveness of the MBMs

2. Cost effectiveness

3. Feasibility of implementation

4. Need for technology transfer and capacity building within developing countries

5. Potential to mobilize finance to mitigate climate change; and

Despite the fact that the terms of reference include consideration of the Kyoto Protocol (which includes the principle of Common But Differential Responsibilities), many countries still took exception to the fact that the terms of reference of this Expert Group did not explicitly include the principle of Common But Differential Responsibilities (i.e., Kyoto Protocol Annex 1 Developed Countries ?will? transfer technology, knowhow and resources to developing countries).

Developing countries and a few small island developing states agreed to the terms of reference which they considered embrace the principle of Common but Differential Responsibilities.

Draft EEDI/SEEMP Regulation

By a narrow margin, MEPC 60 agreed very preliminary text to mandate requirements for EEDI (Energy Efficiency Design Index) and the SEEMP (Ship Energy Efficiency Management Plan). The agreement extends only to the basic concept and structure of the draft text, as several significant issues, including minimum ship size, application date and EEDI target reduction rate in years to come.

1. EEDI is derived from emission factors associated with the fuel consumed by the main engine emissions, nominal auxiliary engine power, and auxiliary generator power, all of which are adjusted by a factor for any innovative energy efficient technologies used onboard.

2. SEEMP establishes a mechanism to implement environmental management, energy monitoring and efficiency-improvement systems of the ship"s operation.

Many Governments who spoke objected to the use of MARPOL Annex VI as the statutory instrument to implement GHG reductions as they had reservations on the appropriateness of including CO2 as a pollutant within the scope of MARPOL Annex VI and on the speed to which such an amendment, if adopted, would enter into force (16 months after adoption). Although the Committee is satisfied with the formula for determining the EEDI for oil tankers and bulk carriers, there remain a number of issues that remain to be resolved with respect to ship size (400 gt and above was tentatively proposed), EEDI formula adjustment for ship type, application date and required EEDI reductions to meet in the future for the eleven ship types identified. In light of the above reasons, the Committee agreed to the convening of an intersessional working group to progress the development of the draft text.

Revisions to MARPOL Annex I and Annex VI:

1. A new 200nmi USA/Canada Emission Control Area (ECA) was adopted and is scheduled to enter into force on 1 August 2011. The limits contained in the revised MARPOL Annex VI, which is scheduled to enter into force on 1 July 2010, will apply to ships transiting this new ECA on 1 August 2011 as well as to the current two ECA"s (1.0% SOx emission limit on 1 July 2010 which reduces to the lowest 0.10% on 1 January 2015). Also, engines installed on ships constructed on/after 1 January 2016 which operate within ECA will need to meet the highest NOx Code Tier III emission standard.

2. MARPOL Annex I was revised to add a new regulation 43 to prohibit the carriage in bulk as cargo or carriage and use as fuel of the following oils in the Antarctic Area:

3. Crude oils having a density at 15°C higher than 900 kg/m3;

4. Oils, other than crude oils, having a density at 15°C higher than 900 kg/m3 or a kinematic viscosity at 50°C higher than 180 mm2/s; or

5. Bitumen, tar and their emulsions

6. A revision to the Supplement to International Air Pollution Prevention certificate was approved to clearly document which sulphur limit a ship meets. If adopted at MEPC 61 in October 2010, the revisions will enter into force in February 2012. A new MEPC Circular was also issued to allow the early documentation of these sulphur limits:

7. 4.50% (not valid on or after 1 January 2012), 3.50% (not valid on or after 1 January 2020) or 0.50% or an alternative means of compliance, when ships operate outside of an emission control area; and

8. 1.00% or 0.10%, or an alternative means of compliance, when ships operate within an emission control area.

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