While disappointment over the lack of direction from the UN climate conference on reducing carbon emissions in the maritime sector was the post script to a horror year for shipping in 2009, Copenhagen’s failure does at least renew the opportunity for the world’s supreme maritime body to plot its own course on greenhouse action.

The emissions challenge comes on top of a host of pressures on the shipping sector. The financial crisis and the world recession left the industry with low freight rates and a great excess of capacity going into 2009 - with a not-insignificant volume of newbuildings on slipways around the world threatening to worsen the situation. While 2009 ended better than it started, no one appears to be predicting anything more than a modest recovery in the world economy and the shipping sector in 2010, but there is confidence that at least the worst is passed.

The push to replace single hull tankers with double hulls, the phasing in of cleaner, more refined ship fuel requirements, and looming emissions control areas around North American coastlines and Europe’s Baltic and North Sea lanes are all contributing to the economic squeeze on ship owners now and ongoing. The rising incidence of piracy is a further bugbear. Against this backdrop is the uncertainty over moves to reduce to maritime greenhouse emissions, certain to add another dimension to the economic challenges in coming years.

As the world economy recovers and the rapid industrialisation of China, India and other developing countries rolls on, global trade is set for large growth for at least the next few decades. While only contributing around 3 per cent of global greenhouse emissions now, on the back of this expected trade expansion shipping emissions are forecast to double or triple by 2050 - at the same time as some high-emitting sectors are beginning action to see emissions plateauing or falling.

The pressure for industry action on its emissions has grown substantially in the last two years and there is general acceptance in the shipping industry and its key maritime bodies of the responsibility for reducing emissions. The issue is how to do so equitably across the breadth of shipping industry and for trade in general. There is growing support to do this via economic measures, so-called market-based instruments. These have been identified as a fuel levy, an emissions cap and trade scheme or a baseline and credit trading scheme centred on an energy efficiency improvement index. At the same time there is the straight technological push for new design and operational solutions to lower emissions.

Shipping representative bodies were hoping for a concrete outcome in Copenhagen that would give the International Maritime Organisation (IMO) responsibility for implementing measures. They also wanted firm targets set for emissions reductions in the sector consistent with other national and sectoral commitments under an overarching global climate agreement. There was also a hope that a major legal question would be resolved over how to reconcile the Kyoto Protocol’s demand that responsibilities for climate action be common but differentiated among countries according to their capacity to do so with the IMO’s overriding principle that regulation provide a level playing field for all, free of trade distortions.

While there was no UNFCCC agreement on shipping, the pressure on the sector to take action on emissions still remains higher going into 2010 than it ever has been. The next significant step comes in March at the IMO when its Marine Environment Protection Committee (MEPC) reviews its work plan for voluntary trialling of efficiency and technology measures to cut emissions. This began last July when at the same time it put off a decision on market-based instruments for two years or more. The question is whether enough heat has now been generated for IMO members to agree to take more decisive action. In essence, this means to act on market measures ahead of the UNFCCC, and before the EU or US jump in.

The IMO said in statement at the conclusion of the Copenhagen climate conference that it will reassess its work plan in light of its outcomes, or lack of them. Whether this means consideration of slowing down or speeding up moves to mandatory measures or the implementation of market-based instruments is not discussed. But it is clear that indecision at the UNFCCC does keep open a narrowed window of opportunity for the IMO and the maritime industry to plot the sector’s own destiny - if it can come up with a credible plan of action for implementation over a credible time period.

Industry association BIMCO says that despite the inconclusive UNFCCC process, Copenhagen has moved the debate along and it will likely produce some further movement at the MEPC meeting. “But without having a target for GHG reductions it will be difficult, and no solution has yet been found to the fundamental problem of common but differentiated responsibilities,” it said.

The opportunity also didn’t go unrealised at the International Chamber of Shipping (ICS) when it reflected the IMO’s disappointment at the lack of firm direction from the UN meeting. The ICS warned IMO member governments that if they can’t agree on a decisive package then the window again risks being closed as “some countries will develop unilateral measures to regulate at national or regional level the CO2 emissions of ships”. Something that will be far less effective and equitable outcome for the industry, the ICS says.

The European Commission will already be weighing up whether to move ahead on its own directive for EU shipping in the style of its action on the aviation sector, capping emissions on traffic into and out of the EU. The US climate and energy bills currently in Congress also propose taxes that would draw in bunker fuels.

But at the beginning of 2010, for at least a short time, the ball is firmly back in the IMO court.

Sources: Hellenic Shipping News Worldwide, The Island, Business Times Singapore.


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