Regulatory overview

The IMO has an ambition to halve GHG emissions by 2050 and a vision to decarbonize shipping as soon as possible within this century. The initial IMO GHG strategy will be revised in 2023, including these goals. The IMO is following a two-tier approach to implementing decarbonization measures, focusing first on a limited set of short-term measures, before embarking on more comprehensive medium- and long-term measures.

Existing and upcoming (short-term) measures

Current measures addressing GHG emissions include only three mandatory requirements:

  • The Energy Efficiency Design Index (EEDI) for newbuilds mandating an up to 30% improvement in design performance depending on ship type and size
  • The Ship Energy Efficiency Management Plan (SEEMP) for all ships above 400 GT in operation – although it contains no explicit and mandatory requirements to content and implementation
  • The Fuel Oil Consumption Data Collection System (DCS) mandating annual reporting of CO2 emissions and other activity data and ship particulars for all ships above 5,000 GT

At MEPC 75 that took place from 16 to 20 November 2020, three additional measures were approved, affecting all existing cargo and cruise ships, with expected entry into force on 1 January 2023 (subject to adoption at MEPC 76 in June 2021):

  • The retroactive application of the EEDI to all existing cargo and cruise ships above a certain size, known as the Energy Efficiency Design Index for Existing Ships (EEXI). This will impose a requirement equivalent to EEDI Phase 2 or 3 (with some adjustments) to all existing ships regardless of year of build and is intended as a one-off certification. The EEXI is to be verified by the Administration and a new IEEC issued no later than the first annual survey on or after 1 January 2023
  • A mandatory Carbon Intensity Indicator (CII – e.g. Annual Efficiency Ratio [AER – grams of CO2 per dwt-mile]) and rating scheme where all cargo and cruise ships above 5,000 GT are given a rating of A to E every year. The rating thresholds will become increasingly stringent towards 2030.For ships that achieve a D rating for three consecutive years or an E rating, a corrective action plan needs to be developed as part of the SEEMP and approved. Technical specifications regarding baselines, methods of calculations and ship-specific requirements will be established through guidelines to be finalized and approved at MEPC 76.
  • A strengthening of the SEEMP (Enhanced SEEMP) to include mandatory content, such as an implementation plan on how to achieve the CII targets, and making it subject to approval. The implementation of the SEEMP will also be subject to audits.

These new requirements for existing ships will be reviewed by the end of 2025, with particular focus on the enforcement of the carbon intensity rating requirements. A new CII will also be developed to make requirements not described in guidelines mandatory.

In addition to the upcoming EEDI Phase 3, a possible Phase 4 can be introduced later this decade, further tightening requirements for newbuilds.

Medium- and long-term measures

While the proposed short-term measures should be adequate for reaching the 2030 goals, further measures, or increased stringency of the short-term measures, are needed to achieve the 2050 ambitions. The medium- and long-term measures may include market-based measures such as a carbon tax or an emission trading system. The IMO has made the large-scale development and deployment of carbon-neutral fuels a core part of its long-term strategy. This is driven by the understanding that not only are these fuels essential for achieving the 2050 reduction goals, they are also the only practical way for shipping to achieve the ultimate vision of full decarbonization before 2100.

Related links

New GHG regulations for ships approved during IMO MEPC 75 meeting

Read our statutory news (Nov 2020)

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