Case gives clarity on the incorporation of standard terms. Credit: 3D Animation Production Company, Pixabay

Scepticism on the IMO’s approach to proactive legislation

 

By Carly Fields

 

Shipping is at a critical juncture as it grapples with the complexities of the newest regional emissions legislation from the EU – FuelEU Maritime – all the while keeping a weather eye on discussions of impending global regulations from the International Maritime Organisation (IMO). 

At the Baltic Exchange Tanker & Gas Market Insight Forum during IE week 2025, a panel of experts dissected the European Union’s FuelEU Maritime regulation and the IMO’s efforts to introduce international emissions abatement legislation, underscoring a landscape fraught with uncertainty and challenges.

Martin Crawford-Brunt, CEO at Lookout Maritime and emissions lead at the Baltic Exchange, expressed a degree of disillusionment with the regulatory approach.

“We have to turn it around a little bit, because I have lost faith in the ability of the regulator to, as they put it, level the playing field,”

he said. He criticised the regulators’ tendency to introduce regulations with acknowledged flaws, relying on promises of future adjustments. “Well, they haven't succeeded, and I doubt they will, because of the geopolitical situation. So, their assertion that they will level the playing field and everyone will pay the same cost is not true, because we've got different pressures in different sectors and segments.”

Crawford-Brunt advocated for a market-driven approach, suggesting a move towards “round voyage, global greenhouse gas equivalent for every unit of cargo discharged … and actually benchmarking that against the Baltic standards, so you've got the same ability to translate the emission cost of a voyage into dollars per tonne or timecharter equivalent”. This, he argued, would facilitate transparency and allow the market to accurately price emission costs.

 

‘Starting from scratch’

Panellist Edwin Pang, founder and director at Arcsilea, acknowledged the unprecedented nature of regulatory moves to reduce emissions from shipping. “It's important to sort of remember that regulators are doing this for the first time in effect. We're inventing something from scratch, and it's never going to work at the beginning,” Pang said. He highlighted the need to stimulate demand and production of alternative fuels, noting that the fines levied under the regional FuelEU are intended to bridge the cost gap between green fuels and conventional fossil fuels.

However, Pang stressed the complexity of global implementation, pointing to the numerous guidelines required to make an IMO emissions regulation operational. “We have almost 20 guidelines we need to write to make this work. And while you have the regulation, the thing that makes it work are these guidelines.”

Philip Roche, partner at Norton Rose Fulbright LLP and also on the panel, underscored the inherent challenges of decarbonising the shipping sector.

“As people in shipping, we have to push back. This is a phenomenally hard-to-abate sector.

Seriously talking about nuclear as an option shows how hard it is to abate, because you just need to start thinking about nuclear, and your head explodes with the practical issues around that.”

Pang gave some insight into the IMO regulatory process, saying: “I think the regulatory process is not so much broken as overwhelmed. We're used to safety regulations where something has happened and you try and prevent that from happening again. Here we are anticipating a problem and anticipating a set of solutions, some of which don't exist.” He said there were ongoing collaborative efforts between industry, regulators, and class societies to address interpretation issues and develop case studies and calculators.

 

Fuel certification needed

A significant concern raised by Pang was the lack of an international fuel certification scheme. “We have no international certification scheme within the IMO for fuels, so we have to create one from scratch. If we don't have an international fuel certification scheme, you can't go to Brazil or China and buy some random bit of fuel and say, ‘Oh, this is fine’, because it won't be recognised. That's what we're working on and that's really, really important. I'm sure it'll be the source of many disputes.”

At the regional level, Pang defended the EU’s proactive approach in bringing in FuelEU ahead of global legislation, arguing that its structure allows for more in-depth discussions compared with the IMO. “The EU is 27 member states who have the necessary structures to have quite a detailed discussion, analysis and thinking around how this is going to work - much more discussion time than at the IMO. The IMO is 176 member states, a whole bunch of NGOs and one or two meetings of one week a year. We've done much more thinking about this, and now, having learned from the mistakes, we can go and look at the IMO process and then iterate.”

Discussions on global emissions regulations sit against the realities of ordering ships today to maintain a robust fleet. Owners have to make decisions on the specifications for ships today that will in the water for the next 20-25 years.

“With the carbon targets we've got by 2050 what hope have we got of actually meeting these targets?”

Pang asked. He described the dilemma faced by shipowners, who must make decisions about future fuel readiness without a clear consensus on the optimal pathway. He therefore highlighted the importance of flexibility in newbuilds. 

Roche echoed that sentiment, noting the trend of “fitted for, but not with” in shipbuilding contracts. “They're leaving space, for carbon capture systems in the funnels. They're leaving space for extra tanks and that sort of thing to try to future proof the ships, but until there is a reasonable direction, people aren't going to be rushing to build and buy expensive technology to fix these things.”