The Poseidon Principles are the world’s first sector-specific, self-governing climate alignment agreement amongst financial institutions. The principles provide a global framework to quantitatively assess and disclose whether financial institutions’ lending portfolios are in line with the policies and ambitions of the IMO of reducing shipping’s total annual GHG emissions by at least 50% by 2050.
Currently, there are 28 signatories who together represent a bank loan portfolio to global shipping of more than $185 billion – nearly 50% of the global ship finance portfolio.
Sea Cargo Charter:
The Sea Cargo Charter has established a common baseline to quantitively assess and disclose the climate alignment of ship chartering activities around the globe. Consequently, the Sea Cargo Charter allows for the integration of climate considerations into chartering decisions to favour climate-aligned maritime transport. The Sea Cargo Charter is applicable to bulk ship charterers.
Currently, the 23 signatories of the Sea Cargo Charter include Cargill Ocean, Equinor, Maersk Tankers, and Norden among others.
In June 2021, the Marine Environment Protection Committee (MEPC) in IMO put forward two new regulations devoted to minimizing the marine sector’s carbon emissions and environmental impact: the Energy Efficiency Existing Ship Index (EEXI) and the Carbon Intensity Indicator (CII).
The EEXI rating scheme, which will be applicable for all vessels above 400 GT, measures CO2 emissions per transport work, purely considering the ship’s technical design parameters. The EEXI will be a one-time certification, and non-compliance will result in possible fines or detention in port.
The CII rating scheme, which will be applicable for all vessels above 5,000 GT, measures how efficiently a ship transports goods or passengers and will be included in the Ship Energy Efficiency Management Plan (SEEMP). Ships will be given an annual CII rating between A and E, and the rating thresholds will become progressively more stringent towards 2030. Although agreed in principle, the final calculation details have yet to be agreed.
Both regulations have been put into force from January this year.
Cost of carbon:
The European Parliament has approved draft legislation to include emissions from ships in the EU Emissions Trading System (ETS) gradually from 2023 and phased in over a three-year period. Under the ETS scheme, ship owners will have to buy permits under the ETS when their ships pollute or else face possible bans from EU ports.
In addition to ships sailing within the EU, the proposals will also cover 50% of emissions from international voyages starting and ending in EU.