The move to reduce the output of greenhouse gas emissions in shipping is both very important in terms of its impact on the economics of shipping but also very unclear in that few if any know how to reduce emissions of greenhouse gases. The issue is also politically sensitive at an international level, with large differences in the approach of different nations.
A significant means of achieving what are often quite unclear political objectives is through various forms of regulation. In shipping this is more complex than usual as the sector is highly international and in the past at least, difficult to control. However, the International Maritime Organisation (IMO), an agency of the UN, has acted as a platform for attempting at least to create international agreements around the issue of CO2 emissions. The result has been the IMO’s Green House Gas Strategy, the purpose of which “aims to reduce carbon intensity of international shipping by 40% by 2030, compared to 2008”. By 2050 the target is a 50%
In June 2021 the IMO adopted a series of agreements on regulations around the “carbon intensity” of shipping. Although the regulations appear to be tentative at this stage, they appear to focus what they call an “Energy Efficiency Existing Ship Index (EEXI)” which is a “means to improve the energy efficiency that will enable an “annual operational carbon intensity indicator (CII) and CII rating”. The Index will provide the basis for linking greenhouse gas “emissions to the amount of cargo carried over distance travelled.”
Each shipping will have an index rating on the basis of “A, B, C, D, E – where A is the best” and “administrations, port authorities and other stakeholders as appropriate, are encouraged to provide incentives to ships rated as A or B also sending out a strong signal to the market and financial sector.”
So, presumably the IMO aims to utilise some form a semi-market mechanism to drive changes in fuel use. This leaves open, however, how this will happen and what fuel will be chosen to achieve this.