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• Draft EU submission to ISWG-GHG 22 says bloc is ready to consider proposals to refine or adjust the NZF
• Any final package must still deliver well-to-wake net-zero by or around 2050
• Measure must sit in MARPOL Annex VI and be adopted under tacit acceptance, contradicting the US position
• Flexibility floated for ships that cannot source low-GHG fuels at the ports they serve
• No position taken on any individual fuel, with comment on biofuels, crops, and indirect land use change (ILUC) all absent from the text

The European Union has said it is willing to consider alternatives to the IMO Net-Zero Framework (NZF), provided any replacement meets four conditions, according to a draft submission to the International Maritime Organization seen by Ship & Bunker.

The document was circulated to member states as an advance copy from the European Commission on July 6 and is due to be filed with the IMO ahead of a July 20 deadline, co-sponsored by 27 EU member states and the Commission.

It is aimed at the 22nd Intersessional Working Group on GHG (ISWG-GHG 22), which meets from September 1 to 4, and marks the clearest statement yet that Brussels will engage with the rival texts now circulating, including a set of draft amendments filed at the end of May by Liberia, which earlier took a Global Fuel Intensity (GFI) framework to MEPC 84 alongside Panama and Argentina.

"The co-sponsors express their commitment to seeking the widest level of support possible in the final package of mid-term GHG reduction measures," the draft says.

"To this end, they signal their readiness to consider proposals on how to address concerns with the draft amendments to MARPOL Annex VI on the Net-Zero Framework, as long as the final package of measures is in line with the 2023 IMO GHG Strategy."

The four conditions are that the measure:

• achieves net-zero GHG emissions on a well-to-wake basis by or around 2050
• incentivises the energy transition from the start of implementation
• can be enforced across compliance options while offering flexibility that does not strand assets
• contributes to a just and equitable transition, setting out "clear and plausible" ways to fund investment

What the EU Will Not Give Up

On enforcement, the draft says the measure must be introduced as regulatory text under MARPOL Annex VI and adopted under the tacit acceptance procedure, a direct rejection of the United States demand at MEPC 84 for an explicit acceptance procedure.

It adds that any framework must remain enforceable by port and flag states on the basis of non-discrimination and no more favourable treatment.

The co-sponsors also acknowledge that some ships will be unable to meet GHG intensity targets, either for technical reasons or because low-GHG fuels are not available at the ports they call at, and say flexibility should be built in to allow a smoother and less costly transition for those vessels.

Compliance by reducing the GHG intensity of the energy used should nonetheless remain the most attractive option within any flexibility mechanism, the draft says.

On the just and equitable transition, the co-sponsors say proposals must set out "clear and plausible" ways to fund investment so that developing countries, in particular small island developing states (SIDS) and least developed countries (LDCs), can take part in the transition and build the capacity to produce zero and near-zero GHG fuels themselves.

What the EU Does Not Say

What the draft does not do is take a position on any individual fuel, with any comment on biofuels, crops, and indirect land use change (ILUC) all absent from the text.

The omission sidesteps what has become one of the live fights of this negotiation, with the US having used its submission to ISWG-GHG 21 to press for ILUC risk to be assessed on a regional basis, a change that would favour US corn ethanol over Brazilian sugarcane and Southeast Asian palm.

Crop-based fuels are meanwhile shut out of FuelEU Maritime compliance in practice, because fuels made from food and feed crops are assigned the emission factor of the least favourable fossil pathway, and producers of those fuels, ethanol among them, will be reading the EU's silence closely.

Food security survives as one of the tests any alternative must pass, but the draft asks only that proposals "address disproportionally negative impacts, including on food security, as appropriate", and that such impacts be assessed and addressed where they are identified.

That is a good deal softer than the restriction the EU applies at home, and the draft stops short of saying whether Brussels would expect a global measure to cap or exclude crop-based fuels in the way its own rules do.

The submission notes that both the EU Emissions Trading System (EU ETS) Directive and the FuelEU Maritime Regulation contain review clauses that are triggered if the IMO adopts a global measure, an issue that goes to the heart of the US call for a mandatory phaseout of the EU ETS.

Pressure on that point is not coming from Washington alone.

Brazil wants the framework adopted with explicit text in its cover resolution confirming its status as the only global framework on the issue, and notes that many delegations at MEPC 84 stressed the need for a single global regime to head off fragmentation and regional measures.

The EU's own review clauses are the mechanism by which that would have to happen, and the draft does no more than acknowledge they exist.

A Crowded Field

The EU is not the first to move in what have already become prolonged talks on the shape of a global GHG framework for shipping.

Indeed, the proposals it now says it is willing to look at are already in circulation.

They include four sets of draft amendments to MARPOL Annex VI that were circulated by the IMO Secretary-General in late May, filed under the six-month rule so that they can be considered at MEPC 85, tentatively set for November 30 to December 3.

All four were filed after MEPC 84 in May ended without agreement on the framework.

On May 26 Liberia lodged a fresh text rather than a reworking of the GFI framework, followed by Brazil on May 28, then Tuvalu and a joint submission from Australia, Canada, South Africa, and the United Kingdom on May 29.

They do not all pull in the same direction.

Brazil says the framework should be adopted as approved at MEPC 83 with only strictly necessary adjustments, such as dates, and has circulated its own text purely as a fallback in case consensus requires one.

Tuvalu's version keeps the IMO Net-Zero Fund and its rewards for zero and near-zero fuels intact, the two features the US has said it will not accept.

That leaves the EU's four conditions as a filter on a field that is already crowded, rather than an opening bid on an empty one.

The IMO is due to resume its second extraordinary session and decide on adoption of the NZF on December 4.