TODAY’S Daily View comes in the form of a FAQs on the new IMO rules.

Q: Two compliance tiers? Remedial units? What is this horrible mess?

A: Correct.

Q: *Sigh*. So how do the penalties work?

A: You pay $380 in remedial units (RUs) for every tonne of CO2 equivalent above the base compliance line (the top one). You can also buy surplus units (SUs) for those tonnes.

On top of this, you will pay $100 per tonne of CO2e for every tonne between the base level and the direct compliance target.

If you fall between the two tiers, you only pay $100 for every tonne above the DCT line.

If your emissions come in below the DCT line (the green zone) you don’t pay anything and can even generate surplus units.

Here’s a nice graph I borrowed from the Maersk Mc-Kinney Moller Center for Zero Carbon Shipping’s summary:

For more pain/detail, Lloyd’s Register’s summary of the rules is here and DNV’s is here. Lynn Loo, of the Global Centre for Maritime Decarbonisation, has a good set of charts on LinkedIn here.

Q: What counts as a ZNZ fuel? How do I get surplus units?

A: We don’t know yet. The IMO hasn’t agreed the emissions factors (in grams of CO2 equivalent per megajoule) for future fuels yet, so exact numbers are impossible to predict.

Q: What does the EU do with its ETS and FuelEU now that we have the global regulation we were promised? Will it just go away?

A: The European Commission has said it will consider bringing its carbon schemes into line with the IMO as long as it deems the IMO rules ambitious enough, which we won’t know until the LCA numbers are in. Expect those at the formal adoption by IMO in October.

Cynics are sceptical that EU member states will vote to turn off the lucrative new income stream that the ETS and FuelEU will bring in, so don’t hold your breath for dramatic repeal.

More to come. Send your questions to [email protected] and I’ll try to answer them.

Declan Bush,
Senior reporter, Lloyd’s List

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