Executive Summary. The Marine Environment Protection Committee (MEPC) of the International Maritime Organization (IMO) has adopted the Initial IMO Strategy on reduction of greenhouse gas (GHG) emissions from ships which envisages to “reduce GHG emissions from international shipping and phase them out as soon as possible in this century.” It also expresses the ambition to:

• reduce CO2 emissions per transport work, as an average across international shipping, by at least 40% by 2030 compared to 2008; and
• to peak GHG emissions from international shipping as soon as possible and to reduce the total annual GHG emissions by at least 50% by 2050 compared to 2008 whilst pursuing efforts towards phasing them out as called for in the Vision as a point on a pathway of CO2 emissions reduction consistent with the Paris Agreement temperature goals.

The Initial Strategy also includes a list of candidate short, mid and long-term measures, defined respectively as measures that will be agreed by the MEPC before 2023, between 2023 and 2030, and after 2030. Given these timelines, the level of ambition for 2030 will have to be achieved by short- and possibly also mid-term measures. The short-term measures could also be instrumental in achieving a peak in emissions as soon as possible and setting them on a downward course. However, the Strategy recognizes that in order to meet the 2050 Level of Ambition, the global introduction of alternative fuels and/or energy sources will be required.

In the context of the Initial Strategy, this report designed short-term measures based on the list comprised in the initial strategy, and assessed their impacts on 2030 emissions.

        Short-term Measures. The Initial Strategy contains a list of 13 candidate short-term measures. Of the 13, 5 can be considered to have a direct impact on CO2 emissions from ships. These are (using the numbering of the Initial Strategy):

• Further improvement of the existing energy efficiency framework with a focus on Energy Efficiency Design Index (EEDI) and Ship Energy Efficiency Management Plan (SEEMP), accounting for the outcome of the EEDI regulations review;
• Develop technical and operational energy efficiency measures for both new and existing ships, with indicators in line with the 3-step approach that can be utilized to indicate and enhance the energy efficiency performance of shipping, e.g., Annual Efficiency Ratio (AER), Energy Efficiency per Service Hour (EESH), Individual Ship Performance Indicator (ISPI), and Fuel Oil Reduction Strategy (FORS);
• Establishment of an Existing Fleet Improvement Programme;
• Consider and analyze the use of speed optimization and speed reduction as a measure, taking into account safety issues, distance travelled, distortion of the market or trade and that such measure does not impact on shipping’s capability to serve remote geographic areas.
• Encourage the development and update of national action plans to develop policies and strategies to address GHG emissions from international shipping in accordance with guidelines to be developed by the Organization, taking into account the need to avoid regional or unilateral measures.

Some of these measures, like the Existing Fleet Improvement Programme, have been described in detail in various submissions to the MEPC. On others, little more information is available than is contained in the list above. This report has developed more detailed designs of the measures which are presented in summary below.

        Further Improvement of the EEDI. This report presents two policies to further improve the EEDI. The first is to bring forward the implementation date of Phase 3 of the EEDI from 2025 to 2022, and introduce a fourth phase in 2027.

The second is a policy to apply the EEDI to existing ships, which requires a more elaborate description. Under this policy, each ship would need to have an attained measure of its design efficiency, similar to the EEDI for new ships, but potentially calculated on the basis of existing documentation. A target would be set, e.g., 10%, 20% or 30% above the applicable reference line, and within a certain timeframe, ships would need to meet the new standard through retrofits of energy technologies or reducing engine power.

Further improvement of the SEEMP. This report analyses three options for further improve the SEEMP.

First, the SEEMP could be aligned with other energy efficiency management plans by mandating companies to set a goal for the energy efficiency of a ship. This has proven in other sectors to improve the impact of the policy. A shipping company would need to adopt an energy efficiency metric which it considers to represent the efficiency of the ship well and set a target. In addition, progress towards the target would need to be monitored and the target would need to be updated regularly. SEEMPs would have a limited validity in order to ensure that targets will indeed be updated.

Second, the SEEMP could mandate ships to regularly establish a speed-fuel curve following a standardized method. This could facilitate the communication on efficiency between ship owners and charterers and help reduce the split incentive (where ship owners don’t reap benefits of investments in energy efficiency because charterers benefit from the lower fuel costs).

Third, mandating ships to install cost-effective technologies. This is the most complicated improvement of the SEEMP as it would change the nature of the SEEMP from a management plan that has to be developed on the basis of guidelines into a regulation that requires ships to change their design efficiency. Under this policy, a group of experts would establish a list of technologies that are generally cost-effective to implement. Examples of such technologies could be advanced hull coatings, propeller upgrades like ducts or counter-rotating propellers. Ships would have to apply these technologies at their next drydocking, unless they can prove to their administration that the technology is not cost-effective for the ship in question.

        Operational efficiency standards. This measure would entail that ships monitor their operational efficiency using an indicator that needs to be agreed by the IMO. The IMO would also set reference lines and targets for ships. Ships would then be required to meet the applicable operational efficiency target.

        Existing Fleet Improvement Program. The existing fleet improvement program would require ships to set aside a certain amount of money each year, related to the fuel consumption of the ship. This money would need to be invested in Energy Efficiency Bonds, which can only be used to purchase energy efficiency technologies for ships. Shipping companies would be allowed to convert the Bonds for any ship, and would thus have an incentive to invest it in the improvement of the ship for which it is most cost-effective.

Speed Limitation. This regulation would introduce a ship-type and size with specific maximum speed which ships would not be allowed to exceed.

National or Regional Measures. This report presents three possible national or regional measures and focusses on how the IMO could facilitate States or Regions to adopt them. First, IMO could offer a platform for developing a standard for ship-shore communication that could inform ships well in advance on the availability of pilots and berths and allow them to approach ports at an optimal speed. Second, the IMO could offer a platform for the development of a standard for port incentive schemes. Third, the IMO could develop a framework to allow incentivizing the uptake of renewable fuels on short-haul routes.

Impacts of the Short-Term Measures on Emissions. The measures presented and analyzed in this report can be grouped into three categories:

• Measures that can help remove barriers to the implementation of cost-effective technologies or operational practices:
• Strengthening the SEEMP;
• Mandatory goal-setting;
• Strengthening the SEEMP
• Mandatory periodic efficiency assessment;
• Develop a standard for ship-shore communication for voluntary use;
• Develop a standard for port incentive schemes for voluntary use; and
• Create a framework for incentivizing the uptake of renewable fuels.
• Measures that mandate ships to improve their technical or design efficiency:
• Strengthening the EEDI for new ships;
• Applying the EEDI to existing ships;
• Strengthening the SEEMP;
• Mandatory retrofits of cost-effective technologies; and
• Existing fleet improvement program.
• Measures that mandate operational carbon intensity improvements:
• Setting mandatory operational efficiency standards;
• Speed regulation.

The first category of measures in general has a limited impact on emissions because the many cost-effective measures will be implemented anyway over time in most Business as Usual (BAU) scenarios and because some barriers will remain. Although the emission reductions vary per measure, they are typically a few percent. These measures are not able to ensure that the shipping sector meets the 2030 level of ambition of the IMO GHG Strategy, which is to improve the CO2 intensity of maritime transport by at least 40% relative to 2008.

The second category of measures has a slightly larger impact on emissions because they can also mandate the adoption of measures that are not cost-effective from a private perspective. The measure that applies only to new ships has a limited impact on emissions by 2030, but the impact will increase in later years. However, the measures that apply to the existing fleet can have larger impacts, depending on the stringency applied. Emission reductions by 2030 are typically several percent. Moreover, measures that exclusively incentivize improvements in technical/design efficiency show a risk of a rebound effect. That is to say that savings in technical efficiency are diminished because of an economic incentive created to operate at higher speeds. The results suggest that the rebound effect could perhaps halve the benefit of CO2 emissions reduction gained from the technical efficiency improvements. These measures by themselves are not able to ensure that the shipping sector meets the 2030 level of ambition.

The third category of measures has the highest impact on emissions because they apply to all ships, can ensure that ship owners have to meet a certain efficiency target, and/or because they incentivize speed reduction which is the measure that has the greatest potential to reduce emissions. This category of measures has the ability to meet or exceed the minimum level of ambition for 2030.

The operational efficiency can be calculated annually for individual ships on the basis of data available within shipping companies and reported to the Flag State in the IMO Data Collection System. Average annual speeds can also be calculated from the Data Collection System. The difference between the measures is that the definition of the average annual speed is straightforward, while there is no agreement yet on what a suitable operational efficiency indicator would be.

Both speed limits and operational efficiency standards will require most ships to reduce their speed if the 2030 CO2-intensity ambition is to be met. There is a difference, however. At equivalent CO2 reduction outcomes, operational efficiency standards allow ships more ways to comply than to reduce speed: improving the design efficiency, switching fuels, improving the management or logistics of the ship, et cetera. As a consequence, the resulting speed in 2030 will be somewhat higher than under equivalent speed reduction measures.

The authors of the CE-DELFT Report are Dagmar Nelissen and Jasper Faber. The study was conducted in collaboration with UMAS and supported by Öko-Institut, Lloyd’s Register together with David Lee.

Download the full report from:  https://cedelft.eu/wp-content/uploads/sites/2/2021/03/CE_Delft_7M92_Study_on_methods_and_considerations_for_the_determination_of_greenhouse_gas_Def.pdf