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CO2 to dominate regulatory landscape

Tue 10 Oct 2017

CO2 to dominate regulatory landscape
The roadmap for the reduction of CO2 emissions was first announced at MEPC 70 in 2016

The sulphur cap is dominating headlines now, but cutting greenhouse gas emissions is the next regulatory challenge facing shipping

Almost as soon as IMO's Marine Environmental Protection Committee announced that 2020 would be the deadline for compliance with the global sulphur cap, it was certain that this would dominate regulatory discussion for years to come.

This comes as no surprise. According to IMO estimates, the 0.5% sulphur limit for marine fuels in 2020 will affect as many as 70,000 ships, causing nothing short of a paradigm shift in marine fuel. It is more than just another regulation: it is a challenge that goes right to the heart of the most fundamental aspect of marine propulsion technology.

The issues and challenges associated with this – from fuel availability through compliance to enforcement – are covered extensively in this supplement. But it is widely agreed that, whatever the difficulties posed by the 2020 deadline, it did at least give the industry certainty in terms of what it had to do and by when.

This certainty was reinforced earlier this year by MEPC 71, which ruled out any possibility that there would be any form of delay to the 1 January 2020 implementation of the sulphur cap. The majority of member states rejected a proposal to collect data to allow IMO to take stock of the availability situation ahead of 2020.

Certainty in one area, though, is often balanced by its opposite in another. The natural tendency to concentrate on the global sulphur cap tends to obscure another major regulatory issue that is coming right behind it: the reduction of greenhouse gas (GHG) emissions.

The shipping industry was not directly affected by the 2015 Paris Climate Change Accord, in which it was agreed that achieving the necessary reductions should be left within the remit of IMO. In response, IMO pledged in 2016 to have GHG emission regulations in place from 2023.

This announcement was not well received by all parties. Speaking at the time, Sotiris Raptis, shipping officer at campaigning group Transport and Environment, said: “This can in no way be seen as a proper response to the challenge laid down by the Paris climate agreement. The International Maritime Organisation is proposing to stall any action until 2023. The decision to delay by at least a further seven years any agreement on reducing greenhouse gas emissions from shipping constitutes an abject failure by national governments and the shipping industry.”

But within shipping, opinions differ over what constitutes a reasonable target. The argument divides along predictable lines, with a number of European and island states pushing for an ambitious target, while emerging economies, major flag states and industry voices are arguing against an absolute emission cap, on the basis that it could have a negative impact on economic development.

By way of compromise, in June this year four major international shipping and maritime trade associations made a joint proposal to IMO on ambitious CO2 reductions by the global shipping industry.

BIMCO, Intercargo, Intertanko and International Chamber of Shipping (ICS) made a detailed submission proposing that IMO member states “immediately adopt two Aspirational Objectives on behalf of the international shipping sector,” the joint press release stated.

These ‘Aspirational Objectives’ include keeping international shipping’s annual total CO2 emissions below 2008 levels, and reducing CO2 emissions per tonne of cargo transported one kilometre, as an average across international shipping, by at least 50% by 2050 compared with 2008.

It was also suggested that IMO should give consideration to another possible objective of reducing international shipping’s total annual CO2 emissions, by an agreed percentage of 2050 compared with 2008, as a point on a continuing trajectory of further CO2 emissions reduction.

“The shipping industry wants IMO to remain in control of additional measures to address CO2 reduction by international shipping and to develop a global solution, rather than risk the danger of market-distorting measures at the national or regional level,” the joint statement said.

Tellingly, the trade associations pointed out that any objectives adopted by IMO must not imply any commitment to place a binding cap on the sector’s total CO2 emissions or on the CO2 emissions of individual ships.

Crucially, from a fuels point of view, the statement also emphasised that “dramatic in-sector CO2 reductions alongside increasing trade would require substantial and sustained research into the development of alternative fossil-free fuels and new technologies.”

Speaking on this subject in September, ICS chairman Esben Poulsson said: “The world has great expectations for IMO delivering an ambitious greenhouse gas reduction strategy for the international shipping sector. We are confident that this initial IMO strategy, once adopted next year, will match the goals and philosophy of the Paris Agreement on climate change, while also fully recognising that the sustainable development of the world and its peoples is critically dependent on the continuing smooth flow of global trade, about 90 per cent of which is transported by sea.”

Mr Poulsson stressed that ICS and its member national shipowners’ associations are committed to helping IMO agree on some truly ambitious CO2-reduction objectives that IMO can present at the 2018 Conference of Parties to the UN Framework Convention on Climate Change (UNFCCC) Paris Agreement. 

He went on to give his backing to IMO, saying: “IMO is the only body which can deliver further GHG reduction measures that will have a meaningful impact on the emissions of the entire global shipping sector. It is vital that IMO remains in control of this critical issue, building on the real progress already made with its package of technical regulations that became legally binding across the entire world fleet in 2013, the very first global agreement of its kind adopted for a major industrial sector.”

IMO has been fiercely resistant to any attempts by external bodies to usurp its authority in this area. Speaking in January this year, after EU lawmakers debated whether to include carbon pollution from the maritime sector under the EU's emissions trading scheme, IMO Secretary-General Kitack Lim said any attempt by the EU to impose new regulations risked “undermining” a climate deal for shipping.

“I am concerned that a final decision to extend the EU-ETS to shipping emissions would not only be premature but would seriously impact the work of IMO to address GHG emissions from international shipping,” he said.

Whether or not this sort of pressure is having an effect remains to be seen, but certainly IMO has been more forthcoming on the subject of GHG regulation of late, describing as "a miracle" the progress, in the past few years, on talks to cut the sector’s carbon footprint.

Speaking during London International Shipping Week in September, Secretary-General Lim made it clear that the 2018 deadline for setting out on this path was dominating thoughts at IMO. “Next year really will be a time when the world will expect the IMO member states to deliver a vision, as a first stage in the IMO roadmap,” he said.

The exact nature of this roadmap remains to be seen, of course. But what seems certain is that decarbonisation in one form or another will be the end result. This will inevitably have a huge effect on the fuel choices made by shipowners for years to come.