Company: ASC
Filing Date: 2025-03-07
Form Type: 20-F
Source: 0001558370-25-002500
Chunk: 62

Company: Ardmore Shipping Corp
Filing Date: 2025-03-07
Form: 20-F
Item: Item 4
Chunk 62
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 ammonia. It may also include limiting the speed of ships. Currently, there is uncertainty regarding the exact measures that the IMO will undertake to achieve these targets.

IMO-related uncertainty is a key factor preventing ship owners from placing new orders, as the vessels with conventional propulsion systems may have a high environmental compliance cost and possibly faster depreciation in asset values in the future. Some ship owners have decided to manage this risk by ordering LNG/methanol fueled ships to comply with stricter regulations that may be announced in future.

The IMO concluded MEPC 80, addressing the current GHG measures and an additional basket of mid-term measures, including an economic and technical measure. Details on these measures will be discussed further in the upcoming inter-sessional meetings held by the IMO. The economic measure is expected to come in the form of a GHG levy and the technical measure will introduce a Goal Based Fuel Standard (GFS), which will assess the fuels that are used onboard on a life cycle basis according to the life cycle GHG intensity of marine fuels (LCA) guidelines. Both measures are expected to be implemented in 2027.

EU ETS and FuelEU

In addition to the IMO regulation, the EU has proposed a set of proposals including the EU Emissions Trading System (“ EU ETS”) and the FuelEU Maritime Initiative. Shipping emissions will be phased into the EU ETS gradually, starting in 2024, resulting in obligations to surrender allowances covering 40% of in-scope emissions in 2024, 70% in 2025 and 100% in 2026. The EU ETS will include 100% of emissions from voyages and port calls within the EU and 50% of emissions from voyages between an EU port and a non-EU country. In addition, Methane (CH4) and Nitrous oxide (N2O) will be included from 2026. The EU ETS provides rules regarding GHG intensity with respect to energy used on-board all ships arriving in the EU. It aims to reduce net GHG emission by at least 55% by 2030 and makes climate neutrality by 2050 legally binding. All ship owners trading in European waters will need to comply with these regulations.

The European Union's FuelEU Maritime Regulation (“ FEM”), which will come into effect on January 1, 2025 establishes a framework for decarbonizing the maritime industry within the European Union and European Economic Area (EEA). It dictates mandatory reductions in the yearly average greenhouse gas (GHG