The International Maritime Organisation (IMO) is working on ways to reduce greenhouse gas (GHG) emissions from ships with the possible introduction of a two-tier system for GHG Fuel Intensity compliance.
This proposal, discussed at the recent meeting of the Intersessional Working Group on GHG Emissions (ISWG-GHG 19), aims to ensure ships meet specific GHG intensity targets. It is not unlike the EU-ETS system which allows ships to offset their emissions by using surplus compliance units or purchasing remedial ones.
The tiered system is a key component of the draft IMO Net-Zero Framework, which seeks to meet the goals of the 2023 IMO Strategy on the Reduction of GHG Emissions from Ships.
The proposed framework eliminates the previously discussed flat-rate contribution or levy, focusing instead on a flexible approach where ships exceeding compliance targets can earn surplus units.
These units can then be transferred, banked or cancelled, while those not meeting the targets must either acquire surplus units or pay for remedial units, with pricing varying depending on the degree of non-compliance.
Further developments include the introduction of provisional thresholds for zero or near-zero GHG fuels, and the establishment of an IMO GFI Fund to manage finances generated by the compliance unit scheme.
While the framework marks significant progress, negotiations on key issues, including pricing and exceptions for small island developing states and least developed countries are ongoing. Member states will continue discussions at MEPC 83 in April, with final regulations expected by October 2025.
