Collector time | IBIA: inconclusive talks on bunker fuel carbon tax and R&D levy proposals at MEPC 76

On Friday June 18, the International Bunker Industry Association (IBIA) released an update regarding the results of MEPC 76:

The 76th Session of the IMO Marine Environment Protection Committee (MEPC 76) adopted a work plan on how to proceed to identify appropriate medium and long-term measures to put maritime transport firmly on track carbon neutrality.

The 6-day session, June 10-17, spent most of the available time discussing potential policy instruments to reduce greenhouse gas emissions from international shipping, succeed in adopting short-term energy efficiency measures but making no progress on two different proposals aimed, respectively, at funding the search for low-carbon alternatives and pushing away from fossil fuels.

MEPC 76 had for consideration a revised proposal for an International Maritime Research and Development Council (IMRD) first presented by a group of maritime organizations, now with the broad support of several IMO member states. The key element of the proposal is a mandatory contribution to R&D equivalent to $ 2 per tonne of fuel oil consumed to finance and accelerate the R&D of low and zero carbon technologies.

The original proposal was discussed at length at MEPC 75. Although the revised version addressed many of the concerns raised at that time, it soon became clear that it would be impossible to conclude the discussion on this point at the MEPC. 76. While several delegations supported the R&D proposal, there were also divergent views, including concerns regarding the allocation of funds, the governance structure and the associated impact assessments. While the proponents of the R&D proposal went to great lengths to explain that the mandatory $ 2 levy is not a market-based measure (MBM), some delegations continued to view it as an MBM and highlighted doubts the effectiveness of the proposal in this context. The discussion was suspended until MEPC 77.

After the shortened discussion on the R&D proposal, MEPC 76 held initial discussions on a real MBM, namely the much-publicized proposal for a mandatory levy of $ 100 per tonne of carbon dioxide equivalent on heavy fuel oil at from 2025, as a starting point. This is intended to encourage a shift away from the status quo fossil fuels towards low and zero carbon alternatives.

Once again, discussions showed divergent views on the proposal, with concerns about the impact on states, the amount of the tax, the distribution of funds and other elements, but there are also had considerable support. Further discussions on the proposals, as well as further submissions on MBMs, were invited for MEPC 77.

With discussion of the R&D proposal and MBMs proving inconclusive, MEPC 76 turned its attention to agreeing on a work plan, following a number of submissions on how to move forward in the next few. steps in IMO’s work to reduce GHG emissions from ships by the initial GHG strategy in 2023.

After lengthy discussions, the MEPC 76 adopted a work plan on the concrete way forward to advance the candidate measures in the medium and long term.

  • Phase I – Collection and initial reflection of proposed measures (Spring 2021 to Spring 2022);
  • Phase II – Assessment and selection of measures to be further developed (spring 2022 to spring 2023); and
  • Phase III – Development of a measure (s) to be finalized by (an) agreed target date (s).

The above will cause a huge workload. Already, hundreds of proposals and commentary documents have been submitted to the IMO on issues related to GHG reduction. Each potential new policy tool needs to be assessed in terms of its potential impact on states and trying to identify the real potential for reducing emissions.

Much of this work will take place between MEPC meetings through Intersessional Working Groups (ISWG-GHG) and Correspondence Groups, not to mention research and negotiations between Member States and NGOs with status. advisory to IMO.

Photo credit and source: International Association of the Bunker Industry
Posted: June 21, 2021


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