Outlook 2022: Sustainability

Roger Strevens, vice president global sustainability, Wallenius Wilhelmsen

There is no getting away from it: the age of regulatory disruption has arrived for the shipping industry. The operative word is “disruption,” because while there have been decades of regulation in shipping already, the scale of the change that forthcoming greenhouse gas, or GHG, regulation will bring makes it pale by comparison.

Many will be familiar with the International Maritime Organization, or IMO, as the global regulator of shipping. However, it is no longer the industry’s only major regulator. With its “Fit for 55” package of legislative proposals unveiled in July, the European Union has made clear its intention to reduce GHG emissions from shipping.

Two key proposals in the Fit for 55 package are the inclusion of shipping in the EU’s Emissions Trading Scheme, a GHG emission “cap and trade” program; and FuelEU, which would require a progressive reduction in GHG intensity of fuel. While the proposals can still change, it would be wise to anticipate some version of them to become law.

The most impactful of IMO’s agreed GHG reduction measures – so far – is the Carbon Intensity Index, which will attempt to regulate vessel operational efficiency. Moves are also afoot at IMO to create a Market Based Measure – a global carbon pricing program. However, it is unclear if the political will exists to bring such a potentially transformative measure into being.

While it can be confidently said that there will be a significant impact for shippers from these EU and IMO regulations, it is not yet known exactly what, or how much, it will be. It is therefore highly advisable for shippers to raise these issues with their carriers to keep them abreast of developments and, critically, understand their carriers’ readiness to deal with them. At Wallenius Wilhelmsen it is a discussion we always welcome.