MEPC 82 Expectations

The International Maritime Organization’s (IMO) Marine Environment Protection Committee (MEPC) is at the center of the action for the shipping industry’s decarbonization.

With MEPC’s 82nd session coming up, we had several IMO delegates from across the industry join Setting Course, an ABS Podcast, to discuss what they expect from the meeting, the hottest topics that will be discussed, and issues future meetings will need to address.

If you like this episode, share it with your friends, leave a review, or send feedback to podcast@eagle.org. Learn more about how ABS is supporting the maritime industry at www.eagle.org.

To hear about the outcomes from the MEPC 82 meeting, view our webinar on demand here: https://bit.ly/3UCrm1x

Key Points

• MEPC 82 could be a pivotal committee meeting, determining the future of decarbonization in the shipping industry.
• Mid-term measures and the review of the Carbon Intensity Indicator (CII) framework will likely play a big role in the meeting.
• Other important issues to be addressed include the Ballast Water Management Convention, the Hong Kong Convention, and the implementation of the IMO net zero framework.
• The industry is looking for clarity, certainty and pragmatic solutions to meet the targets and transition to a more sustainable future.

Guests
Thanos Theocharis is a Senior Manager of Regulatory Affairs for International Registries, Inc. (IRI)/Marshall Islands Registry. He joined IRI’s office in Piraeus, Greece, in June 2007 as a vessel operations manager. He is a member of the delegation representing the Marshall Islands at the IMO.

Panos Zachariadis has been the Technical Director of Atlantic Bulk Carriers Management in Greece since 1997. He is a Fellow member of the American Society of Naval Architects and Marine Engineers, a member of Technical Committees of several shipping Classification Societies and the Union of Greek Shipowners, Chairman of BIMCO’s Marine Environment Committee, and serves on the Board of Directors of Hellenic Marine Environment Protection Association (HELMEPA), the Hellenic Chamber of Shipping and Marine Technical Managers Association (MARTECMA). He has been a member of the Greek delegation to the IMO since 2004.

KC Wong is a Senior Technical Manager for INTERTANKO covering the China and Hong Kong region. He is also the Secretary to INTERTANKO’s Safety and Technical Committee, representing the tanker industry on safety and technical matters in liaison with national governmental organizations and international organizations, such as the IMO. KC joined INTERTANKO after his secondment from the Maritime and Port Authority of Singapore (MPA) from Sep 2020 to Apr 2022.

Emmanuel Vergetis is the Greece Region Representative for INTERCARGO. He joined the INTERCARGO Secretariat in January 2022 after many years working for a classification society. He is a graduate of National Technical University of Athens and holds a master’s degree of Naval Architecture and Mechanical Engineer.

Stamatis Fradelos is ABS Vice President of Regulatory Affairs. The Regulatory Affairs team interfaces with the International Maritime Organization (IMO), Flag Administrations and the International Association of Classification Societies (IACS), facilitating the application of regulations and maintaining ABS and clients’ awareness on regulatory issues being progressed and developed internationally. Stamatis is also member of IACS Board of Directors, the IACS Council and the IACS Sub-Committee on Quality Policy participating in IACS governance and strategic decisions.

Chapters

• 0:00 Introduction
• 1:42 Will MEPC 82 be disruptive for the industry?
• 8:13 What are the hot-button issues for MEPC 82?
• 19:37 What issues need to be addressed in future MEPC meetings?
• 32:21 Closing Thoughts

Transcript

Brad Cox (0:08)
Welcome to Setting Course, an ABS Podcast, where we're charting the future of the marine and offshore industries. I'm Brad Cox and I'll be your host today. 

When it comes to the business of decarbonizing global shipping, the IMO's Marine Environment Protection Committee, or MEPC, is at the center of the action. Back in July 2023, MEPC 80 was a game-changer. The committee introduced well-to-wake greenhouse gas calculations, which will reverberate throughout the industry for decades.

So now with MEPC's 82nd session right around the corner, we wanted to know what the committee has in store for shipping. To answer that question, we've brought together a group of industry leaders who will take part in that discussion in London later this month. 

We're happy to have Panos Zachariadis, Chairman of BIMCO's Marine Environment Committee, Technical Committee Member of the Union of Greek Shipowners and Technical Director of Atlantic Bulk Carriers Management.

Panos Zachariadis (1:01)
Thank you. Thank you for the invitation. Hello, everyone.

Brad Cox (1:04)
We also have Emmanuel Vergetis, the Greece Region Representative for INTERCARGO.

Emmanuel Vergetis (1:09)
Hello everybody, thank you Brad, thank you for the invitation.

Brad Cox (1:11)
We're also happy to have KC Wong, Senior Technical Manager for INTERTANKO.

KC Wong (1:16)
Hi everyone, yeah, very happy to be here. Thank you.

Brad Cox (1:19)
Also joining us is Thanos Theocharis, Senior Manager of Regulatory Affairs for the Republic of the Marshall Islands Registry.

Thanos Theocharis (1:26)
Thank you, Brad. And I'm truly grateful to ABS for inviting me to the podcast.

Brad Cox (1:31)
And returning to the show is Stamatis Fradelos, ABS Vice President of Regulatory Affairs. Welcome back, Stamatis.

Stamatis Fradelos (1:38)
Hi, Brad. Thank you. Happy to join the discussion today.

Brad Cox (1:42)
Alright, gentlemen, let's jump right in here. Like I mentioned, big things tend to happen during MEPC sessions. There's the well-to-wake calculations last year, the ballast water management standards that entered into full force earlier this month. Is the 82nd session going to be one of those disruptive MEPC sessions? Why or why not?

Panos Zachariadis (2:05)
I think yes, I think it's going to be, I mean, all the MEPC meetings are important, but I think this one is going to be a pivotal one because hopefully, it will decide among the many proposals for mid-term measures, which one is going to go forward or which combination of proposals are going to go forward, which are going to be approved at the next MEPC session and then eventually adopted. So, I think it's going to be a pivotal one.

Thanos Theocharis (2:37)
Brad, if I can go second if you like, I'm not going to fully agree with Mr. Zachariadis. Personally, I do not expect the session to be terribly disruptive, but more of a grind. So, much of the controversial issues related to greenhouse gas mid-term measure development, such as the outcome of the comprehensive impact assessment and base document for amendments, will likely be discussed in depth during the intersessional working group taking place the week prior. However, which should carry over into the GHG working group at MEPC, of course. However, the timeline for mid-term measures still leaves room for further work since amendments are not expected to be approved until the next MEPC session. 

And besides, this MEPC has a lot on its plate, like MARPOL amendments, BWM Conventional Review Plan, the CII review, black carbon EGCS discharge assessments, NOx technical code, plastic liter, Hong Kong Convention guidelines. So, as I said in the beginning, it's not going to be terribly disruptive, but, I'm going to repeat myself, I see it more of a grind.

KC Wong (3:45)
If I may be the next one, KC Wong here, I think like what Mr. Theocharis has mentioned, I think it may be we are seeing momentum slowly moving towards an outcome because I think there's still some room. MEPC 82, this year, I think we will have another two more sessions with a special session in next year, 2025 MEPC 84, if it gets approved. I think it really depends on how agreeable everyone is for the greenhouse gas mid-term measures. I think there are a lot of similarities and then there's a lot of effort being made to try to bring the different parties with different proposals to converge. But I think there's also we have sense that there are some divergence in terms of view, especially on whether a levy should be there. We know that this goes against some groups of countries' objectives or interests. Hence, there might be quite a long and labored negotiation that goes on. Yeah, and plus, I think we see a lot of submissions for the CII review, which has to be completed by end of next year. So, I think those are the things which will take up a lot of time from the MEPC.

Brad Cox (5:07)
And Emmanuel?

Emmanuel Vergetis (5:08)
Yeah, thank you. I tend to agree both with Panos and Thanos and of course the very valuable comments by KC. Of course, it will be really critical that there is progress during the intersessional the week before the MEPC and I hope also that there is going to be some good progress with the IMO net-zero framework, which is the draft document that can be submitted. Now, I don't know if finally it's going to be used or if this very complex document that was also submitted during the Bonn discussions, the informal discussion of various member states, it's going to be taking into account. 

But, in a way, yes, there is some room on the other hand. It is critical that there is a substantial amount of consensus among the members in this meeting with regards to the mid-term measures. And of course, there are so many other topics on the table that most possibly are going to be discussed. 

One of the most important topics is also the CII, of course. Just to highlight the complexity of this MEPC session is the fact that we currently have approximately 170 papers that have been submitted in MEPC, plus the previous papers, especially for the CII from the previous sessions that are going to be discussed in this MEPC, plus another more than 30 papers, long papers, and complex papers with various combinations of the mid-term measures that are going to be discussed in the intersessional. So it will be a really complex and difficult session.

Brad Cox (6:44)
Stamatis?

Stamatis Fradelos (6:45)
Yes, thank you Brad. I would also agree with the previous friends and colleagues. We see a lot of interesting topics that are going to be discussed during this meeting, but of course I think the most challenging and important ones are the progress on the mid-term measures and I see this as difficult work for the chairman of the working groups but also the chairman of the committee to try to find consensus on all these different aspects and deviations in the proposal, both on the technical measure and the economic element.

But also the CII framework, you have seen several submissions on correction factors of different ship types, operational profiles, short voyages, etc. So, it will be quite difficult work to try to find a way forward for the committee to, let's say, find the consensus and, at the end, approve the mid-term measures and the amendments to the CII framework at the next meetings. But it is an important one because we understand this meeting will define how we are going to progress and how IMO is going to treat all these proposals and the way the methodology that all these proposals will be assessed will be considered to reach to a conclusion.

Brad Cox (8:13)
So, Thanos, you mentioned the grind and Emmanuel mentioned the 170 some odd papers that are going to be discussed. So to distill that down, what do you guys think are going to be the hottest button issues? You know, what are the ones that are going to really grind the gears and what direction do you think the committee is going to go on those?

Thanos Theocharis (8:33)
So, I believe that definitely an important line of work will be the review of the short-term measure, the CII, the carbon index indicator. And the review is expected to go into the next phase of work, which is the data review phase.

So, there are many proposals highlighting areas of the CII framework that need to be addressed as part of this review. So personally, I believe that that will take much of the discussions of the committee. But we are also in the middle of the review being conducted on the Ballast Water Management Convention, which aim is to take a systematic and evidence-based approach to the development of a package of amendments to the convention itself and any related instruments. One of the items, therefore, which could be identified as requiring considerable discussion within the Ballast Water Review Group at this MEPC session could, in my view, be the revision of the BWMS code, the code that ballast systems are being approved as it has components affecting a quite large number of matters, which the correspondence group on the review of the Ballast Water Management Convention has been working on. So, as I said, there is a variety of matters and I guess it's definitely going to be CII, but I do see some important things also happening in the Ballast Review Group.

Panos Zachariadis (10:03)
So, this is funny. Usually me and Thanos see eye to eye, but not this one. I don't think they're going to spend any big amount of time on CII because they do have time. First of all, the proposals are many and diverse. So, it seems to me — and they don't like to throw out anything and that complicates things. So, it seems to me there might be some special session, some intersessional working group only to try to consolidate the proposals on CII. I don't think anything serious on CII is going to be done at this MEPC. And when I say MEPC meeting, I also include the intersessional working group on mid-term measures. 

As KC said, the momentum is to try to finalize the mid-term measures. That's what I think. And I see there, we started with many proposals and there was consolidation. Japan joined the European Union. So now we don't have a Japanese proposal and a European Union one, we have a European Union and Japan proposal. And on the other hand, we have the Chinese, Brazil, Argentina, and a few others proposal. So we have only two proposals on the table for the mid-term measures. And I think the fact that Japan joins the European Union, it gives to me priority for this proposal to go forward. 

Another thing for this proposal is that IMO has already decided, in the committee before, that we're going to have a technical measure and an economic measure. And the European Union and Japan proposal has those two separately. The Chinese-Brazil-Argentina proposal combines those, which is something that not many people like. So, let's leave it at that for now. I think the focus is going to be more on the midterm measures to go forward rather than anything else.

KC Wong (11:58)
Yeah, I think, like what Panos has said, CII, I think there will be discussion given the number of proposals and that's the deadline for the review set by the IMO to complete the review of the CII. So I think they do need to get some movement on that. But I think also how the CII will be reviewed into whatever form or evolve into whatever form is also dependent on how the GHG mid-term measures will sort of have the interrelation or interdependency part tied to it. If the GHG mid-term measures seem to be adequate, maybe there would be less of a role for CII and maybe CII becomes more of an additional supporting indicator towards those IMO GHG reduction targets. So that could be one possibility it may turn up where both a CII review and the mid-term measures go hand in hand. 

Probably the other hot button issues that we hope to see some discussion and progress made on is probably what are the measures or the options that the industry, the ship operators can actually have more certainty in implementing. The LCA discussion definitely will play a key role, at least provide certainty on how the different fuel options will be certified and hence from there it will be clearer on which investment options to take on and also whether carbon capture will get some progress in the discussion to get some clarity or certainty on whether carbon capture, onboard carbon capture can be a solution that ship operators can look at.

Brad Cox (13:35)
And Emmanuel?

Emmanuel Vergetis (13:36)
Yes, very valid points from all of the colleagues. Initially, let me highlight what Thanos said before with regards to the MEPC and then I will try to answer your question, Brad. MEPC is not only mid-term measure or CII. So there are many, many topics that are going to be discussed, including the ballast water management, the initiation of the fifth IMO greenhouse gas study, the LCA guidelines, which is a cornerstone of the mid-term measures, bio-fuels, carbon capture, the Hong Kong Convention and in consistency with the Basel Convention as well. So there are many, many topics. 

Definitely hot topics are the CII and the mid-term measures. Yes, indeed. There are going to be two separate working groups that will work on these topics separately, among other important topics. With regards to the CII, there is indeed, as Panos mentioned, a correspondence group and an intersessional working group that will work on this subject between MEPC 82 until MEPC 83. Therefore, my impression is that we're not going to see a final decision on the CII, but I hope that there is going to be a solid approach and term of reference or principal guidelines with regards to this discussion that will follow on the CII. 

On the other hot topic, the mid-term measures, the committee is called to finalize the MARPOL Annex VI actually with the two new regulations. The technical measure, which is the GFS, and I think the most difficult points in the GFS that there is concession among, first of all, there is concession among all the members around the GFS as a technical measure, but still there are some important things that need to be defined like the GFI, the trajectory, what will be the trajectory, alternative compliance approaches like the pooling, which is something that is discussed in many papers. 

And with regard to the economic measure, things are much more complicated. There are political issues there and, as Panos said again, different approaches from some countries. Therefore, it will be really difficult and challenging. As a hot button, I think a hot topic, the calculation of the economic distribution and what will be this levy. Will it be $50, $100? I don't know. And of course, one of the topics is the distribution of the revenue. But I don't expect that there's going to be a final decision. 

Again, just for reference, to highlight this complexity, we have the steering committee on the comprehensive impact assessment of the mid-term measures and the basket of measures, that convened in total 11 times between MEPC 80 and MEPC 82. So I think it shows how complex is the situation. To wrap up on the mid-term measures, it seems like that all current proposals for the measures have in common some form of collection of payments, so some kind of fund, some kind of levy and fund. And the GFS. So, this is how we are going to see the committee to work, I think. Back to you, Brad.

Brad Cox (17:06)
And Stamatis?

Stamatis Fradelos (17:08)
Yes, thank you Brad. I would agree with my colleagues that, on the CII framework, of course we are going to have the initiation of the review period. All these proposals need to be somehow assessed. So, I understand that the committee needs now to set up the methodology and the process how all these submissions will be assessed. And I think there was a relevant paper, a relevant submission from the European Commission on how — proposing a way forward.

On the GHG, of course, this is the other hot topic, I agree with Panos that we expect some developments there compared with the CII framework, which is just the initiation and the review. But on the GHG, what I would expect is the committee to start working according to the so-called IMO net-zero framework. If you remember, the IMO net-zero framework has been approved during MEPC 81 and provides an outline about possible amendments on MARPOL Annex VI. 

So, the net-zero framework provides amendments in chapter one on new definitions to cover all these mid-term measures. Chapter 2 on surveillance certification, Chapter 4 on possible amendments to SEM and to the data collection system. And the most important part is a new Chapter 5 on regulation of the IMO net-zero framework with Chapter 5.1 to be the GHG fuel standard regulating the phase reduction of fuel GHG intensity in a similar manner like the FuelEU regulation that we have from Europe. And subchapter 5.2 with economic mechanisms. Of course, there we have several submissions and we'll see how this progresses and hopefully we have a good outcome from the intersessional working group that we have before to pave that way during MEPC 82 to be ready to progress. 

And somehow I hope at the end we are going to see a draft text with amendments in MARPOL Annex VI. Of course with a lot of square brackets to be finalized at the next meeting at MEPC 83.

Brad Cox (19:37)
Yeah, so looking further down the track, beyond the next meeting, what are going to be the big issues that MEPC needs to tackle over the next year, two years, three years? What are going to be the big things as we look forward?

Panos Zachariadis (19:50)
Well, I mentioned in the beginning that this may be a pivotal MEPC meeting. And whether it's this one or the next one, it's not really that important. The important thing is that on this one or the next one, the decisions, I'm going to go back to the mid-term measures because that's the most important thing for me. The decisions they're going to take on the mid-term measures are going to be with us for decades and they're going to cost billions and billions of dollars to the shipping industry. We're talking about the impact studies say 127 billion per year to begin with. Practically the cost of transport is going to double by 2030. So we're talking serious stuff.

And of course, I neglected to mention that except for the two main proposals that are proposals from the industry, ICS together with Bahamas and Liberia and World Shipping Council, but those don't count, unfortunately. The member states, they see this as a highly policy issue and they say to the industry practically, you stay out of this. We'll decide and we'll let you know what we decided because this is a very high policy issue, which is a problem. The problem being that they may give us something which is extremely complicated to apply in practice, as I see both of the main proposals being. So I think we're going to get something that's going to be hugely expensive, hugely bureaucratic, difficult to apply in practice, costly, and we're going to long the days that we're going to say, “Oh, how simple and nice was EU ETS,” for example, which if you think about it is very simple. I mean, it's, you know, your emissions, you pay for them, that's it, done. That's not the same way with the measures they're discussing. But that's reality with IMO, unfortunately.

Thanos Theocharis (8:33)
So yes, the revised GHG strategy is clear and keeping to the timelines for adoption of mid-term measures is the obvious big, if not biggest issue for next year. And definitely the significance of developing a carbon pricing mechanism cannot be underscored, but again accurate timelines need to be kept. I would like though, to add another, at least in my personal view, another big issue, could be that in relation to the Hong Kong convention, the recycling of ships. Emmanuel has already mentioned that, which is coming into force on 26th of June 2025. And the fact that, although draft guidance on the conventions implementation and the Basel Convention, which is related to the control of trans-boundary movements of hazardous wastes and their disposal, has been prepared by the IMO Secretariat for the committee's consideration. Due to some potential legal issues identified concerning the interplay between the two conventions, I believe that MEPC should keep requesting the IMO Secretariat to continue and strengthen the cooperation with the Secretariat of the Basel Convention in order to ensure clear implementation of the Hong Kong Convention since the Secretariat of the Basel Convention was not in a position to contribute to the development of this draft guidance that will be considered by MEPC. And the reason has been that this matter will be considered by the conference of the parties at their next meeting which is COP17 and is scheduled to take place in spring of next year in Geneva. So, I think that just because there is a little bit legal uncertainty between those two conventions and take into account that the Hong Kong Convention, which is an IMO convention, will be coming into force in 2025, these things will need to be clear so there's going to be definitely a clear and robust implementation of the IMO Hong Kong Convention.

Emmanuel Vergetis (23:56)
Just to add to what Thanos was saying, very valid points, that apart from the Basel Convention, we also need to see alignment with the European regulation and the EU Ship Recycle Regulation that is currently already revised by the European Union and probably it's going to be more, much more strengthened. We also need alignment in these regulations as well. 

Going back to your initial question, I hope that, and with regards to the short-term measures, I think it will be important that the committee will adjust the CII, or whatever this KPI is going to be, to a measure that is going to better reflect the vessel through energy efficiency. And also, we also need to start considering the potential overlaps between the short-term measures and the mid-term measures. And there are some more papers also submitted in MEPC, I think by Korea and RINA, I think, on this subject.

And of course, a big question will be the quality of the data that are going to be submitted to IMO DCS. Since it seems that the IMO DCS is going to play the role of the recording of all this information based on which ships will need to comply with the GFS and also will pay the levy. So this will be important as well.

Now, on the mid-term measures, yes, member states are going to decide, of course, because, as Panos said, these are highly political issues. On the other hand, with regards to the implementation — and while we will have the framework of the MARPOL Annex VI with the new regulations there, there is going to be a significant amount of work in order to ensure the efficient implementation by the ships. A lot of work is going to be done in creating various guidances. For example, if the charter or commercial operator will be responsible for the cost or not, or how the regulation will permit ships to participate in a pool and all these issues that probably will need further guidance. In all this work, and all these new measures that are going to hit the shipping community. I think it is very, very critical minimizing the administrative burden. And this needs to be taken seriously into account in the implementation of these measures. 

And of course, there is going to be a lot of work in order that we finalize the LCA framework. So these default emission factors that Stamatis mentioned and KC mentioned, these are of critical importance that are there in the mid-term measures and also for ship owners and all the other certification schemes that need to be developed for these fuels in order to have the fuel label as discussed before.

And last but not least, one subject that is going — still is not discussed, but it's going to be quite challenging, while we consider the establishment of a fund or some kind of fund where all these billions are going to be gathered, as Panos said before, there are many legal issues, and probably also in connection with the UN climate fund principles, that will need to be reviewed. Creating and distributing all these revenues is going to be, I think, really difficult and challenging in the following years, as well on how the IMO will develop this fund and how it will work. 

KC Wong (11:58)
I think what Panos and Emmanuel have brought up is very, very valid points. Especially on what Panos mentioned about the playground is very much of a member state playground in terms of how the discussions go, definitely on various topics since IMO is a member state organization. But of course, we do, from the industry, we do have to share what we see on the ground as well, because in the end, eventually, the transition has to be done by the industry, by the ship operators and the ship owners who have to put in the investments in order to meet the transition goals. 

And we have to actually voice out to say what is possible and what is not possible. Even though the EU ETS, as mentioned, has its merits in terms of implementation, but it does have its other downsides as well. And we do have to be careful about what sort of outcomes and signals it's going towards, especially if the outcome is going to deviate from the transition goals. 

We may end up paying, and the more resources taken away from the parties who can make the transformation, the later they are able to actually be able to do the transition, to make the investments, hence the targets will not be met. So, we do have to be very careful about that. 

So, in terms of big issues that they need to be tackled, definitely the reduction trajectory. We know that the member states are trying to come up with the technical thresholds on the annual year by year basis how much to reduce, but that has to be tied in with what is the amount of net-zero fuels available. And that is still a big question mark because nobody is looking at the supply side. And the way the discussion is going, it seems that it's left to the free market to actually enable that to be met. And as we've seen, that has also been what we see with the ballast water management systems. We live in the free market, yes. Things can be installed, but there's a long trail of problems that we have to deal with. And in the end, we may not meet the objectives that we seek to solve. So I think these are the two key main things in terms of trajectory and also the availability of net-zero fuel.

Brad Cox (29:39)
And Stamatis, what do you think are going to be the big issues a year or two out?

Stamatis Fradelos (29:40)
Yes, thank you Brad. I would relate the big issue that MEPC needs to tackle over the next couple of years with the big questions we are receiving by our clients, mainly ship owners. Like for example, “I’m going to place a new building contract, what type of fuels should I select? What readiness I should provide to my designer? Or which technologies should I invest?” So I think it is important the committee to progress fast the work — for us to have a better understanding on all these parameters which will help us to address these questions. 

For example, it would be useful to know what would be the carbon price, which technologies or fuels will be promoted and will be eligible for funding. Is it LNG? Is it going to be eligible? Or bio-fuels or only the green fuels, the renewable fuels of non-biological origin. What will be the limits of the GHG intensity over the years or what will be the penalties? How the penalties are going to be calculated and whether there will be flexible compliance mechanism, like pooling.

Also on the CII framework, how it will be amended to tackle all these operational parameters, the correction factors, the possible enhancement of the enforcement mechanisms, whether we're going to see penalties, because now the documentation is quite relaxed. And of course, it would be good for us to know what will be the reduction rate after 2026. 

Here I would like to mention a quite interesting proposal from Liberia, Brazil and ICS as well  proposing the construction of new reference lines, revised reference lines, excluding the idle emissions. So all these parameters for port waiting time, etc., will not be considered. So for us, it is important to take informed decisions for the future and navigate safely and build a safe, future-proof vessel is to know these parameters as soon as possible. Of course, we do not expect to have all these answers at this MEPC meeting, but at least we expect this MEPC meeting to define the methodologies and the process and to have some good answers, clear answers and more clarity at least at the next meeting.

Brad Cox (32:21)
Okay, great. I just want to open things up, see if you guys had any closing thoughts you wanted to impart with our listeners. KC, why don't you go first?

KC Wong (32:30)
All right, thanks, Brad. I think what I would go back to is what I've mentioned about we need to really have clarity and certainty as soon as possible. The IMO has set the targets and the time is running out in terms of the reaction time, lead time required to meet the targets. I think the industry generally is prepared that there be increased costs for the transition and we have to do it. But of course, it has to be done in a pragmatic way. We hope that this session would be able to look at all angles and look beyond the political interests and get on with what we need to do.

Brad Cox (33:03)
Emmanuel, you want to go next?

Emmanuel Vergetis (33:05)
Yes, Brad, thanks. I'm optimistic that the shipping industry will meet the targets of this transition and this strategy. Shipping has done this before and there is technical competency among ship owners and ship operators. And I do see the alignment from all the other stakeholders — class societies, banks, ports, flags, etc., So, on this issue, so, there is alignment from all the stakeholders. Therefore, I'm optimistic. Of course, we need to be pragmatic. And what we need to highlight is that the majority of the investments are also on land. So member states and countries need to support shipping on this issue. They need to provide the fuel, the needed fuels, the safe fuels that are needed on this transition.

Brad Cox (33:55)
Stamatis, any closing thoughts?

Stamatis Fradelos (33:57)
Yes. We need to move fast, need clarity. But during this journey, we need to be careful as well because I understand now there is quite a big pressure to move forward and fast. We need to be careful and consider the safety aspects thoroughly. So this is a key element, the safety and how we will safely deliver this GHG reduction journey that we have in front of us.

Brad Cox (34:23)
And Thanos, I'll have you go before Panos for a change.

Thanos Theocharis (34:25)
Okay, all right. Thank you. Thank you, Brad. I wish that I could give the answers that Stamatis is looking so he could further relay them to ABS clients. But I don't have the answers. And I do understand and I really appreciate that the regulatory compliance can be sometimes or most of the times can be burdensome.

However, I don't think that the industry should expect regulators to take the foot off the gas pedal, anytime soon at least. And therefore, my feeling, industry should anticipate strengthened measures in many areas and not just decarbonization that may be one of the hot topics for this MEPC and for the forthcoming MEPCs. 

As I said before, there is, we do see this trend, this trend of strengthening measures in many areas. The Ballast Water Convention, the Hong Kong Convention now, will enter into force. It's MARPOL. It's everywhere. So, I'm not very optimistic that the industry should expect for regulators to take, I said, the foot off the gas pedal anytime soon.

Panos Zachariadis (35:34)
Okay, from my part, I'm glad that the big question we had for many, many years, whether IMO will go for a flat levy or for an ETS has finally been answered. And the answer is both. We're going to go for both. The EU proposal, for example, calls for a levy in the economic element of $100 per tonne CO2, which means about $300 per tonne of fuel. And the ETS is hidden in the fuel element, in the technical element, in the fuel standard, where you buy and sell your underperformance or your overperformance. So, we have both, and the Chinese proposal is not too different. So that's my closing thought.

Brad Cox (36:24)
Okay, great. Well, Panos, Emmanuel, Thanos, KC, Stamatis, thank you all for joining us for this episode. And definitely thanks to your organizations for allowing you guys to take part in this and be part of this discussion. I think it's been a great conversation and I'm sure we'll all be keeping an eye on London in a couple of weeks.

Panos Zachariadis (36:42)
Thank you.

Thanos Theocharis (36:43)
Thank you very much all. Thank you, nice to see you.

KC Wong (36:45)
Yeah, thank you, Brad. Thank you, everyone.

Emmanuel Vergetis (36:47)
Thank you.

Stamatis Fradelos (36:48)
Thank you.

Brad Cox (36:24)
And for all our listeners out there, thank you for joining us for another episode of Setting Course. Be sure to leave a review, share this episode and give us a follow. To learn more about MEPC 82 and the regulations impacting maritime, visit us at www.eagle.org. Thank you for listening.