MEPC.1/Circ.885/Rev.1
7 February 2023
REVISED PROCEDURE FOR ASSESSING IMPACTS ON STATES OF CANDIDATE
MEASURES
1 The Marine
Environment Protection Committee, at its seventy-ninth session (12 to 16
December 2022) approved the Revised Procedure for assessing impacts on
States of candidate measures, as set out in the annex.
2 Member Governments
and international organizations are invited to apply the annexed Revised
Procedure for assessing impacts on States of candidate measures.
3 This circular
revokes MEPC.1/Circ.885 on Procedure for assessing impacts on States of
candidate measures.
ANNEX
REVISED PROCEDURE FOR ASSESSING IMPACTS ON STATES OF CANDIDATE
MEASURES
Background and objectives
1 In April 2018,
MEPC 72 adopted resolution MEPC.304(72)
on the Initial IMO Strategy on reduction of GHG emissions from ships (the
Initial Strategy). The Initial Strategy lists a series of candidate short-,
mid- and long-term measures. As outlined in the Initial Strategy, the impacts
on States of a measure should be assessed and taken into account as appropriate
before adoption of the measure. Particular attention should be paid to the
needs of developing countries, especially small island developing States (SIDS)
and least developed countries (LDCs). Disproportionately negative impacts
should be assessed and addressed, as appropriate.
2 This procedure for
assessing impacts on States of candidate measures identifies steps, specifies
what should be included in the different steps in the procedure, and the
respective roles of the proponent of a measure and of the Committee, without
prejudging the substance of any future impact assessment.
3 The duration of
the impact assessment procedure may range from one to four meetings depending
on the level of assessment required and consideration of a measure by the
Committee before approval.
4 Taking into
account the Work plan for Development of mid- and long-term measures as a
follow-up of the Initial IMO Strategy on reduction of GHG emissions from ships
(MEPC 76/15/Add.2, annex 14) and following completion of the
lessons-learned exercise from the comprehensive impact assessment of the
short-term GHG reduction measure by MEPC 79, the Committee approved this
Revised Procedure superseding the Procedure set out in MEPC.1/Circ.885. This
Revised Procedure should be kept under review, taking into account
lessons-learned from future comprehensive impact assessments.
Procedure
5 Impact assessment
should be simple, inclusive, transparent, flexible, evidence-based and
measure-specific. The comprehensiveness of any impact assessment should be
commensurate to the complexity and nature of the proposed measure. Impact
assessment should be undertaken in parallel with the consideration and development
of a candidate measure. There are up to four steps in the procedure:
.1 Step 1: initial
impact assessment, to be submitted as part of the initial proposal to the
Committee for candidate measures;1
_____________
1 Proponent(s) of the
measure should abide to a 13-week submission deadline, as set out in paragraph
6.12.3 of the Committees' Methods of work (MSC-MEPC.1/Circ.5/Rev.3).
.2 Step 2: submission
of commenting document(s), if any;
.3 Step 3:
comprehensive response, if requested by commenting document(s); and
.4 Step 4:
comprehensive impact assessment.
6 A proponent of a
measure should submit an initial impact assessment at a minimum. However, the
proponent may submit a more detailed impact assessment in the first instance,
taking into account the elements listed in paragraph 15.
Step 1: initial impact assessment
7 Once the
consideration of a measure is initiated, the Committee should consider the
initial impact assessment submitted as part of the candidate measure proposal.
8 The initial impact
assessment should pay particular attention to the needs of developing
countries, especially SIDS and LDCs and, inter alia:
.1 indicate if the
proposal for the measure provides a description of impacts on ships and
emissions;
.2 identify which
impacts should be assessed, taking into account, as appropriate, inter alia (1)
geographic remoteness of and connectivity to main markets; (2) cargo value and
type; (3) transport dependency; (4) transport costs; (5) food security; (6)
disaster response; (7) cost-effectiveness; and (8) socio-economic
progress and development;
.3 indicate both
positive and negative potential impacts;
.4 analyse the extent
of the impacts (e.g. by quantifying them and relating them to normal variations
in transport costs, trade or GDP); and
.5 assess whether the
measure is likely to result in disproportionately negative impacts and, if so,
how they could be addressed (e.g. avoided, remedied, mitigated), as
appropriate.
9 The initial impact
assessment should indicate the methodological tools and data sources used, and
may indicate the limitations of the analysis.
Step 2: submission of commenting document(s), if any
10 Member States may
comment on the initial impact assessment to request clarification and/or
additional information.
11 Commenting
document(s) should be submitted at the latest to the meeting following on from
the one where a proposal has been made.
12 Any interested
Member State or international organization may submit additional information
and/or a separate impact assessment, as appropriate, of a proposed measure or
group of measures.
Step 3: comprehensive response, if requested by commenting
document(s)
13 At the following
meeting at the latest, the proponent(s) of the measure or any interested Member
State or international organization should provide a comprehensive response to
the commenting document(s).
Step 4: comprehensive impact assessment
14 A comprehensive
impact assessment should be initiated, taking into account the issues
identified in previous steps, including any commenting documents.
15 The comprehensive
impact assessment should take into account the guidance on process and
methodological elements for the conduct of comprehensive impact assessments set
out in the appendix and, in addition, pay particular attention to the needs of
developing countries, especially SIDS and LDCs and include, inter alia:
.1 a description of the
assumptions and methods used in the analysis;
.2 a detailed
qualitative and/or quantitative assessment of specific negative impacts on
States; and
.3 an assessment of
whether the measure is likely to result in disproportionately negative impacts
and, if so, recommendations on how they could be addressed (e.g. avoided,
remedied, mitigated), as appropriate.
16 The Committee
should consider the comprehensive impact assessment, in order to inform further
consideration of the proposed measure, and take action as appropriate.
17 The impacts on
States of a measure/combination of measures should be assessed and taken into
account as appropriate before adoption of the measure. Particular attention
should be paid to the needs of developing countries, especially SIDS and LDCs.
18 Once the impact
assessment is completed, and disproportionately negative impacts assessed and
addressed, as appropriate, the measure may be considered for adoption.
Analysis tools, models and support in undertaking the impact
assessment
19 Impact assessment
should be evidence-based and should take into account, as appropriate, analysis
tools and models, including as further described in the guidance on process and
methodological elements for the conduct of comprehensive impact assessments set
out in the appendix, inter alia, as follows:
.1 cost-effectiveness
analysis tools such as maritime transport cost models, trade flows models,
impact on Gross Domestic Product (GDP);
.2 updated Marginal
Abatement Cost Curves (MACCs); and
.3 economic trade
models, transport models and combined trade-transport models.
20 Some Member States
such as SIDS and LDCs may require assistance for the collection of data and
analysis of potential impacts.
Review of the impacts, upon request
21 Once a measure is
adopted and enacted, the Committee should keep its implementation and impacts
under review, upon request of Member States, so that any necessary adjustments
may be made.
APPENDIX
GUIDANCE ON PROCESS AND METHODOLOGICAL ELEMENTS FOR THE CONDUCT OF
COMPREHENSIVE IMPACT ASSESSMENTS
Introduction
1 Following up from
the lessons-learned exercise of the comprehensive impact assessment of the
short-term measure completed by MEPC 79, this appendix provides additional
guidance on several process and methodological elements with the aim to
enhancing robustness and transparency of future comprehensive impact
assessments of candidate GHG reduction measures.
Process for conducting a comprehensive impact assessment
Structure of a comprehensive impact assessment and overall
coordination of the work
2 A comprehensive
impact assessment should comprise of at least the following five distinct but
interrelated tasks:
Task 1 Literature review;
Task 2 Assessment of
impacts of the measure on the fleet;
Task 3 Assessment of
impacts of the measure on States;
Task 4 Complementary
qualitative/quantitative stakeholders' analysis, including relevant
illustrative case studies; and
Task 5 Identification of
areas of missing data, quality assurance and quality control (QA/QC),
uncertainty and sensitivity analyses and integration between various tasks.
3 The Committee
should envisage sufficient time to conduct all these tasks in a meaningful and
manageable way, taking into account the effective implementation of the IMO GHG
Strategy, as revised.
4 All organizations
involved in carrying out each task of the comprehensive impact assessment
should regularly exchange information arising from their findings through
coordination meetings facilitated by the Secretariat.
5 A steering
committee composed of representatives of Member States should oversee the
conduct of a comprehensive impact assessment in accordance with the agreed
terms of reference.
Establishment, role and function of the steering committee
6 The establishment,
role and function of the steering committee on impact assessment should be
based on the following guidance:
.1 Considering the
importance of the comprehensive impact assessment, and the need for the
steering committee to be established in a transparent, open, and fair manner,
the Secretary-General should invite nominations from all Member States by
issuance of a circular letter. Given the technical nature of impact
assessments, it is desirable that members should have the required relevant
expertise on the subject matter. The size of the steering committee should be
decided and announced by the Secretary-General depending on the number of
nominations received.
The
steering committee may be coordinated by the Vice-Chair of the Marine
Environment Protection Committee (MEPC), in line with the practice for the Ad
Hoc Capacity-Building Needs Analysis Group (ACAG).
.2 The steering
committee should be of a manageable size. The steering committee of Member
States should be geographically balanced (e.g. with reference to the five
United Nations regions), appropriately represented by developed and developing
countries, including SIDS and LDCs.
.3 The steering
committee should:
.1 act as a focal point
for the Committee during the conduct of a comprehensive impact assessment;
.2 consider and agree
on the outline of the comprehensive impact assessment and associated timeline;
.3 provide input to any
relevant tendering process and establish the study team, i.e. all organizations
to be involved in carrying out each task of the comprehensive impact
assessment;
.4 when approving the
study outline and providing input to a tendering process, the steering
committee should, inter alia:
.1 review input data,
including proposed baselines, businessas-usual (BAU) scenarios and Marginal
Abatement Cost (MACC) curves;
.2 review assumptions
and methodologies for assessing impacts on both fleet and States;
.3 review results of
conducted sensitivity analysis; and
.4 ensure inclusiveness
and transparency in the impact assessment;
.5 review and monitor
the progress of the comprehensive impact assessment, including providing
feedback on the main methods, databases and data sources to be used, in line
with agreed timelines;
.6 oversee the conduct
of an external review of quality assurance and quality control (QA/QC) issues
in the final report before it is submitted to the Committee; and
.7 confirm that the
study meets the terms of reference.
.4 The steering
committee should provide recommendations to the Committee. It should, as much
as possible, work by consensus, make all efforts to ensure timely completion of
the comprehensive impact assessment, aim at assisting the Committee to make
evidence-based decisions.
.5 The steering
committee should meet regularly, should have sufficient time to consider and
discuss the progress of the work of the different organizations involved in the
comprehensive impact assessment, and provide regular updates to the Committee.
.6 The steering
committee should be assisted in its work by the Secretariat.
Task 1 Literature review
7 A literature
review may be conducted to provide relevant background information for the
comprehensive impact assessment, as appropriate.
Task 2 Assessment of impacts on the fleet
Objective
8 The assessment of
impacts on the fleet should provide an analysis of the impacts of the assessed
measure(s) on the fleet, including the impacts on fuel use, fuel efficiency,
uptake of emission reduction options and costs, and serve as the main input to
the assessment of impacts on States.
Approaches, methods and modelling tools
9 The assessment of
impacts on fleet should rely on advanced modelling approaches, methods and
tools, including, where available, peer-reviewed sources, inter alia, baseline
scenarios, Marginal Abatement Cost Curves, IPCC reports, energy transition
projections, transport demand projections, fleet development models, abatement
uptake models, and logistical improvements.
10 Where available,
approaches, methods and modelling tools approved by the Organization should be
used as this will ensure trust and reliability. Alternatively, the study team
should seek approval of the steering committee for their approach and modelling
tools.
11 The study team
should provide a detailed description of the methodology and data used, a
discussion on the assumptions and limitations of the analysis, and aggregated
results from the data sets to ensure reproducibility of the findings of the
assessment.
12 As appropriate, the
assessment of the impacts on the fleet should consider, inter alia, for the
envisaged GHG reduction potential(s) of the candidate measure(s) and/or policy
scenarios:
.1 all types of fuels, modes of operation and technologies likely
to be used to comply with the measure(s), cost of mitigation options, also
taking into account different fuel and technologies production costs and
availability across world regions;
.2 possible spillover
effects of technology/alternative fuel advancement from other sectors, as well
as competing uses;
.3 variability and
uncertainties both in time and across world regions;
.4 different ship owner
business models, including possible split incentives, in various segments;
.5 the generation and
deployment of revenue if that is foreseen by the measure(s) in the shipping
industry, as appropriate; and
.6 the impact of
regional measures, as appropriate.
Interaction with other tasks
13 Interaction by the
organizations responsible for carrying out the assessment of impacts on the
fleet and on States, and the qualitative/quantitative stakeholders' analysis,
should be envisaged.
14 To ensure
consistency, the same assumptions and scenarios should ideally be used by all
models that form part of the comprehensive impact assessment, or clearly identified
when this is not the case.
15 The assessment of
impacts on the fleet should be accompanied by at least one sensitivity analysis
and/or scenario testing in order to test the robustness of the model outcomes.
Task 3 Assessment of impacts on States
Objective
16 The assessment of
impacts on States should assess the impacts listed in the IMO GHG Strategy,
including quantifying the impacts of the candidate measure(s) in terms of
countries' trade and Gross Domestic Product (GDP) change, using the output of
the assessment of impacts on the fleet as its main input at the global level.
Input data, information to be provided in advance
17 UNCTAD, in
cooperation with other organizations as appropriate, should provide a detailed
description of the methodology and data used, a discussion on the assumptions
and limitations of the analysis, and aggregated results from the data sets
used.
Global modelling
18 The assessment of
impacts on States consists in translating the impacts on the fleet to impacts
on States (e.g. trade and GDP changes), ideally using a computable general
equilibrium (CGE) model combining economic trade modelling and
transport/logistics modelling with a shipping module, if available.
19 As appropriate, the
assessment of the impacts on States should consider:
.1 using also other
models such as gravity models with partial-equilibrium models, sectoral
analysis, macro-economic analysis, econometrics, etc.;
.2 geographical
specificities and route-related impacts;
.3 the possibility of
transport modal shift with changes in maritime logistics costs;
.4 transport costs of
goods by origin/destination pairs, changes in port-calling frequencies, changes
in connectivity index, changes in fleet composition over time;
.5 macro-economic
drivers such as long-term scenarios (IPCC) and energy source transition;
.6 comparison of the
impacts of the measure(s) with other maritime cost/freight rate developments;
.7 impacts of the
measure(s) on final consumer prices, following assessment of the ability of the
firms to pass through costs; and
.8 the loss of
competitiveness of States in their main exports, as well as the consequent
substitution of imports in their main destination markets.
Outputs
20 The impacts on States
should be presented in terms of impacts on transport costs, trade and GDP and
be compared to historical fluctuations in transport costs. The difference
between BAU projections and policy scenarios should be presented. The metrics
presented as a result of the assessment should be easily comparable.
21 A transparent and
rigorous approach to representing the likely impacts of the measure(s) on
countries that are not well represented in data, or a default assumption, needs
to be developed. As appropriate, other economic parameters than GDP, such as
for example impact on consumer prices, may be considered for small economies
with low connectivity index.
22 The analysis should
be accompanied by at least one sensitivity analysis and/or scenario testing in order
to test the robustness of the model outcomes.
Task 4 Complementary qualitative/quantitative stakeholders' analysis
23 To complement the
quantitative modelling of impacts on States, the qualitative/quantitative
stakeholder's analysis should provide complementary modelling of possible
impacts on States by further assessing possible negative impacts, in case where
the global modelling:
.1 has identified a
lack of data that impedes quantitative modelling of impacts on States;
.2 in case of small-scale
economies with a low-connectivity index to identify possible impacts on States,
also taking into account import of essential goods, food security and/or
disaster response, as appropriate; and