MEPC 78: Slow but steady progress towards a decarbonised shipping industry
June 2022

By Erik Hånell, President & CEO of Stena Bulk
June 2022

Earlier this month, the International Maritime Organization (IMO) held the Marine Environment Protection Committee (MEPC 78) to discuss environmental issues concerning the maritime industry. Despite not achieving major breakthroughs in proposed regulation or initiatives, the meeting showed positive and encouraging signs of the industry moving in the right direction towards decarbonisation. As an organisation with a strong and public commitment to sustainable excellence, it was important for Stena Bulk to monitor the progress made on the meeting and the objectives set for MEPC 79.

One of the many positive outcomes from the MEPC 78 is that five more countries —the Cook Islands, Mexico, Myanmar, Colombia, and Malaysia — joined the list of member nations in favour of working together towards a zero-carbon goal.

For the first time, the MEPC also endorsed the idea of developing market-based measures such as carbon tax and emissions trading schemes to reduce greenhouse gas emissions, which is set to be discussed further in the next MEPC.

There were also discussions on deploying revenue from carbon pricing in shipping to out-of-sector uses, which could increase the chances of consensus on market-based measures. A future global carbon levy on shipping’s CO2 emissions would make green technology, including zero-carbon fuels, a competitive option for shipowners as the industry seeks to meet 2050 environmental targets.

I have spoken on numerous occasions about Stena Bulk’s confidence in methanol as a promising low-carbon fuel that will facilitate shipping’s energy transition. In fact, in order to achieve our methanol scaling goals, we are committed to our partnership and joint venture with Proman, the world’s second largest methanol producer. Together, we have already built and delivered two of three planned methanol-powered tankers which will achieve a CO2 reduction of up to 15% by using currently available methanol. This saving has the potential to increase over time as new sources of methanol come online, including blue and green methanol.

Following discussions from the previous MEPC, at MEPC 78 the IMO also finalised the two now widely-know short-term efficiency measures Carbon Intensity Indicator (CII) and Energy Efficiency Existing Ships Index (EEXI), which are now ready for implementation. The CII will force ships of 5,000 gross tonnes or above to improve their annual CO2 intensity by 2% between 2023 and 2026, and the EEXI will force ships to improve their efficiency on par with newbuild vessels. These new regulations will have significant implications on the shipping community, which includes, of course, our own fleet.

It is at the times like this when the industry gets together to determine the future direction of our sector that the team here at Stena Bulk comes to appreciate the importance of our commitment to pioneering innovation and sustainable excellence. We have differentiated ourselves by ensuring excellence at the asset level and building a modern fleet of efficient tankers complemented by enough flexibility to adapt capacity and meet the market's demands.

We see technological investment and future fuels trials – particularly those focused on methanol - as progressive and commercially sensible steps that future proof our fleet and our processes and will drive further commercial success for Stena Bulk in the future. With the ever-growing level of change in our industry, we will continue to strive to be ahead of the curve as we strongly believe that it pays off.

All of this comes with the looming context of shipping entering the EU’s Emissions Trading Scheme which, at the time of writing, is on the verge of ratification. Initially, the ETS will cover 50% of emissions from voyages to and from third countries during the transition period, and 100% of those emissions from January 2027. I look forward to sharing more thoughts on the EU ETS and what it means for our operations in the near future.

Echoing the World Shipping Council’s comments following the MEPC 78 meeting, much more is needed from the shipping community if we are to enable an efficient transition to alternative fuels. We’ll further our dedication to our existing partnerships and remain open to collaborating with other innovators and forward-thinkers in the industry to ensure Stena Bulk remains prepared and on the front foot as we take steps forward towards a greener future for shipping.