We are pleased to provide you with a summary report of the Eighty-First session of the IMO Marine Environment Protection Committee (MEPC 81), which took place from 18th to 22nd March 2024 in London. The session resulted in significant decisions and amendments that will impact our industry. The key outcomes are as follows:

1. Amendments to MARPOL Annex VI:

During MEPC 81, amendments to MARPOL Annex VI were adopted, focusing on several important areas. These include:

*Definitions of fuel oil and gas fuel: The amendments provide clear definitions for fuel oil and gas fuel and specify when the sampling requirements of MARPOL Annex VI regulation 14 do not apply to them.

*Replacement of non identical replacement engines in respect of Marpol Annex VI Regulation 13.2.2 and NOx compliance: The adopted amendments address the replacement of steam or diesel engines and the compliance of Tier III and nitrogen oxide (NOx) emissions.

*Expansion of data reporting: MEPC approved the expansion of data required to be reported to the IMO Ship Fuel Oil Consumption database, MARPOL Annex VI regulation 27 for the collection and reporting of fuel oil consumption. The amendments are expected to enter into force on 1st August 2025.

*New amendments to 2021 guidelines on Shaft/Engine Power Limitation System ( ShaPloLi/EPL system ) to comply with the EEXI requirements and use of Power Reserve.

*Definition of a New Ship, as per EEDI, re Marpol AnnexVI, Regulations 2.2.1 & 2.215 & 2.215 – which impacts one the requirement for ships to be Tier III compliant.

2. Carbon Capture
* Establish a correspondence group to develop a regulatory framework work plan for the onboard use of Carbon Capture for review at MEPC82

3. CII and SEEMP
* Develop a work plan for the revision of the CII and SEEMP for approval at MEPC81 for 2023-24

4. Reclassification of LNG carriers:
*Agreement was reached to reclassify LNG carriers that are currently reported as gas carriers for the purpose of data reporting in Annex VI regulation 27 and the Carbon Intensity Indicator (CII). This decision will ensure accurate reporting and monitoring of greenhouse gas emissions from LNG carriers.

5. Mid-term Greenhouse Gas (GHG) Measures:
* Discussed and agreed upon a schedule to implement mid-term GHG measures. These measures aim to significantly reduce greenhouse gas emissions in the maritime industry. The mid-term measures are expected to include:

* A Fuel standard to establish stringent fuel standard to promote the use of cleaner and more sustainable fuels. This will drive the transition towards low-carbon and zero-emission fuels.

*Economic incentives: The mid-term measures recognize the importance of economic incentives in facilitating the adoption of environmentally friendly practices. These incentives are under development and may combinations of :

a. Financial incentives: Shipowners who achieve or exceed the established emission targets may be eligible for financial incentives, such as subsidies, grants, or favorable financing terms. These incentives aim to offset the costs associated with adopting cleaner technologies and fuels.

b. Market-based mechanisms: MEPC is exploring market-based mechanisms, such as emissions trading systems or carbon pricing, to create economic incentives for reducing greenhouse gas emissions. These mechanisms introduce a cost for emitting carbon, encouraging shipowners to invest in emission reduction measures.

c. Environmental levies or fees: MEPC is considering the implementation of environmental levies or fees on emissions, which would create a financial disincentive for high-emission vessels. This approach encourages the use of cleaner fuels and technologies by making emissions more costly.

The specific details and implementation mechanisms for these economic incentives are still under development and will be further discussed in future sessions. MEPC aims to strike a balance between environmental goals and economic feasibility, ensuring a smooth transition towards a greener shipping industry. The ICS will seek to address these concerns with all governments before the next round of IMO negotiations in September to help ensure that the necessary regulatory framework can be adopted next year for global implementation by 2027

6. Approval of Emission Control Areas (ECAs):
MEPC approved the establishment of Emission Control Areas (ECAs) for sulfur oxides (SOx) and nitrogen oxides (NOx) in the Norwegian Sea and Canadian Arctic. The implementation of these ECAs is scheduled for 1st March 2026. Shipowners operating in these areas will need to comply with the specified emission limits.

7. Ballast Water Management (BWM) Convention:
As part of the review of the BWM Convention, MEPC81 endorsed interim guidance on how to deal with challenging water quality issues and also provided guidance on the temporary storage of grey water or treated sewage in ballast tanks addressing potential environmental impacts.

8. Recommendations for the Carriage of Plastic pellets by sea in Freight Containers.
Agreed to develop international guidelines for the maritime transport of plastic pellets for consideration at MEPC82 – 30/9 to 4/11/2023

9. Hong Kong Recycling Convention
Agreement by MEPC81 to progress discussions with the Basel Convention Secretariat to establish the Hong Kong Recycling convention as the pre-eminent international convention on ship recycling.

These are the key outcomes from MEPC 81 that will have a significant impact on our industry. Should you have any further queries or concerns, please do not hesitate to contact undersigned.