FT: Loopholes and lobbying surrounding the carbon intensity regulation by the IMO

Carbon Levy Photo shutterstock

The Financial Times and other sources have pointed out that shipping companies could exploit loopholes in upcoming IMO regulations targeting carbon emissions, industry experts have warned, potentially limiting environmental progress in one of the world’s most polluting sectors, The Financial Times claims.

Some industry executives have highlighted several weaknesses in the rules, which will require them to rate the carbon intensity of individual ships starting next year, and others accuse certain member states within the UN International Maritime Organization of resisting measures. tougher, they report in the article.

However, the shipping industry has also been criticized by experts who say regulations have been watered down due to their own lobbying.

So-called Carbon Intensity Indicator (CII) regulations are being introduced amid growing pressure on shipping groups to be less polluting.

Based on historical emissions data, around 25 percent of container ships will receive the lowest rating, as will 15 percent of bulk and crude tankers, according to estimates produced by industry group Bimco and shared by the Financial Times.

Estimated % of ships to receive each carbon intensity indicator rating by ship type Source: FinancialTimes and BIMCO
Estimated % of ships to receive each carbon intensity indicator rating by ship type Source: FinancialTimes and BIMCO

With the IMO measures to come into force, shipping industry leaders said companies could find alternative solutions, rather than making meaningful progress toward decarbonization.

“You can pull a number of levers [to improve your rating],” said Lars Robert Pedersen, Bimco’s deputy general secretary, adding that:

  • companies could reduce the carbon intensity of individual ships by spreading the load across a larger number of ships.
  • The CII does not take into account the actual weight of a ship, which means companies could flatter their rating by not fully loading ships.

“An improved [CII] rating doesn’t necessarily translate into something better for the environment,” Pedersen said.

The director of regulatory affairs at Danish shipping group Maersk, Simon Christopher Bergulf, told the FinancialTimes that weak enforcement could also limit the impact of the measures. Although the lowest rated ships are required to produce a “corrective action plan”, the IMO has not clarified what the disciplinary measures are for those who fail to take improvement action when rated D three times in a row or E just once.

Simon Christopher Bergulf suggests that some IMO member states had resisted imposing stronger measures to protect national maritime industries. They report that a couple of people close to the negotiations added that China in particular had opposed the stricter rules at the IMO.

Actually, Tristan Smith, a shipping researcher at UCL, argued that private sector interest groups have also pushed for more “flexible” rules and exemptions, including for ships facing bad weather due to natural phenomena.

Additionally, Aoife O’Leary, executive director of the campaign group Opportunity Green, told the Financial Times that the industry “basically says [there should be exemptions] if there are storms at sea.” All she could do was laugh.”

In 2019, Bimco and the International Chamber of Shipping asked the IMO to allow shipowners to select their own standards for measuring energy efficiency.

Although many of these recommendations were not adopted, “everything plays into [the outcome],” said Tristan Smith.

Furthermore, Bryan Comer, head of the marine program at the International Council for Clean Transportation, said the IMO would have liked to take a ship’s weight into account when measuring carbon intensity. But the industry, including Bimco, previously lobbied against the collection of this data for confidentiality reasons.

Similarly, Pedersen said that Bimco asked the IMO to allow shipowners to choose the metric that is most suitable for them because it is very difficult to create a standard that is appropriate for everyone. The international chamber of shipping, ICS also said it was opposed to a “one-size-fits-all approach to regulation”, adding that troubled waters and “the practical experience of shipowners” must be taken into account.

Lastly, the IMO reports that decisions on the regulations were made by member states that “intensively discussed” calculation methods for the CII, adding that shipowners could use low-carbon fuels and a variety of other methods to improve their rating.

It said “port administrations and authorities”. . . they are encouraged to provide incentives to ships rated A or B [to send] a strong signal to the market,” adding that the CII would likewise be reviewed in 2026.

Source: Financial Times, IMO, BIMCO.

Source The Financial Times

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