Following the 83rd meeting of the IMO’s Marine Environment Protection Committee (MEPC) and the recently approved GHG emissions pricing framework, the Global Centre for Maritime Decarbonisation (GCMD) has developed a cost and compliance calculator to help explore how the two-tiered GHG Fuel Intensity (GFI)-linked pricing system could impact operational costs.
For added clarity, the workings are displayed to enable tracing of the calculation process. Complementing this interactive tool, the graph (see above) plots the two levels of GFI compliance: the Base Target and the Direct Compliance Target.
Ships that emit below the Direct Compliance Target will not be penalised. Instead, they can earn ‘surplus units’ that can be passed on to other ships that need them, or ‘banked’ for future use. Surplus unit prices are market driven and the units can only be banked for two years.
Ships that emit above the Direct Compliance Target but below the Base Target will have to pay a penalty of US$ 100/t CO2e. This amount of penalty scales with non-compliant emissions between these two thresholds. Penalty is paid into a Net-Zero Fund, set up and administered by the IMO.
Emissions beyond the Base Target will incur an even higher penalty of US$ 380/t CO2e. Penalty can be paid into the same IMO fund, or can be balanced with banked or traded surplus units.
Ships that use zero or near-zero (ZNZ) fuels having GFI below 19g CO2e/MJ before 2035 and 14g CO2e/MJ after 2035 are eligible for financial rewards.
For those assessing fuel options, planning newbuilds, or seeking to understand the operational implications, this calculator and the accompanying graph are considered to offer a useful initial overview.
Image: GCMD’s graph shows two-tiered GHG compliance data (source: CCMD)
