Charting A Course for Shipping Decarbonisation: Key Outcomes and Analysis from MEPC 82

The International Maritime Organization (IMO) has made significant strides at the Marine Environment Protection Committee (MEPC) 82nd session, although much work remains to finalize key measures for reducing greenhouse gas (GHG) emissions in shipping.

The primary focus of MEPC 82 was on advancing a global fuel GHG standard (GFS) and a levy to ensure that the “polluter pays” principle is applied, raising revenues to support a “just and equitable energy transition”.

The GFS aims to set minimum GHG intensity (GFI) requirements for marine fuels, which will become increasingly stringent over time. The GFS will include a penalty mechanism for non-compliant ships, allowing them to “pay to comply” by purchasing remedial units (RUs).

Ships that exceed GFI requirements will be able to generate surplus units (SUs) and sell them to others. However, countries such as China and Brazil argue that the penalties and SUs effectively create an indirect carbon price, negating the need for an additional GHG levy.

Despite these measures, a recent analysis by Transport & Environment (T&E) shows that under even the most ambitious GFS scenarios, only a small proportion of global shipping emissions would be indirectly carbon-priced by 2030. Specifically, the study estimates that just 14% of emissions would be priced if 50% of ships opted to “pay-to-comply.” The analysis underscores the need for a separate GHG levy in addition to the GFS to ensure that shipping companies fully bear the cost of their emissions.

As MEPC 82 proceeded in London, pressure mounted on the IMO to keep on track with its 2030 GHG reduction targets. Secretary-General Arsenio Dominguez emphasized incremental operational improvements, such as the use of LED lighting and enhanced digital tools, as ways to boost fuel efficiency.

However, industry leaders, including major container liners, cautioned that these measures alone would not suffice to achieve the deep emissions cuts needed without a transition to zero-emission fuels—fuels that remain both costly and limited in availability.

MEPC 82 also saw convergence around a draft amendment to Chapter 5 of MARPOL Annex VI, setting the groundwork for new mid-term policy measures to drive an energy transition in international shipping.

The draft outlines three potential policy architectures to incentivize emissions reductions: a flexibility mechanism, a feebate system, and a combination of both. These three methodologies are distinct but also comparable to the EU Maritime Fuel Regulation, which has adopted a more straightforward carbon pricing approach by imposing a direct levy on carbon emissions.

The flexibility mechanism, while allowing ships to meet GHG reduction targets in a more adaptable manner, lacks the predictability and revenue generation potential of a direct levy. The feebate system, which combines rebates for overperformance with fees for underperformance, aims to create incentives but may still fall short in terms of providing a consistent price signal, as seen in the EU’s direct approach.

The combination of both mechanisms attempts to balance flexibility and incentives but could face challenges in complexity and implementation.

In contrast, the EU’s FUEM provides a clear carbon pricing framework that not only incentivizes the use of cleaner fuels but also generates consistent revenue to support the energy transition. This more direct approach could potentially be more effective in ensuring that the “polluter pays” principle is uniformly applied across the maritime sector.

The IMO’s decision on which of the three proposed methodologies to adopt will therefore have significant implications for the maritime industry’s trajectory in reducing emissions.

One contentious point discussed during the meeting was the impact of proposed measures on developing nations. Several member states raised concerns about the economic effects of rising transport costs, particularly regarding food security in low-income countries. These concerns will need to be further addressed, with a report expected at MEPC 83.

The meeting also revealed strong support for setting the GHG Fuel Standard using ambitious “strive” targets—30% absolute GHG reduction by 2030 and 80% by 2040, relative to 2008 levels. The question of revenue distribution also remained a major topic of debate, especially on how revenues could address disproportionate impacts on vulnerable states and support a “just and equitable transition”.

Despite the challenges, the discussions at MEPC 82 suggest a growing majority of countries back the GHG levy as a key component of a stable and fair transition strategy for the maritime sector. While progress has been made, there is still a long road ahead, with more decisions expected at MEPC 83 in April 2025.

You might also like to read:

• Green Fuels For Ships and Their Challenges
• Role of Seafarers in Maritime Decarbonization
• Why and How to Decarbonize the Marine Industry?
• Introduction To Methanol As A Sustainable Fuel For Ships
• Simplifying the Energy Efficiency Existing Ship Index (EEXI)

About Author

Azolla is a leading provider of sustainable solutions that drive decarbonization in the maritime industry. With a firm conviction that maritime professionals are key agents of change, Azolla endeavours to educate and empower individuals to embrace sustainable practices and lead the industry towards a carbon-neutral future. The writing team comprises of:

Kiran Shet, Head of Azolla
Aditya Srivatsava, Manager – Energy Efficiency & Decarbonization
Manav Chidambaran – Decarbonisation Specialist
Jothieswaran – Senior Naval Architect