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Shipping at UNFCCC
All eyes on Copenhagen
SHIPPING will not be at the top of the agenda during UN Climate Change Conference (COP15), but the outcome of the meeting will ultimately shape industry decisions for decades to come.
This blog is therefore an attempt to cut through the politics and hot air surrounding the carbon debate and focus on what it means for the shipping industry.
During the Copenhagen conference we will be reporting directly from the floor of the debate to bring you news comment and analysis as it happens. We will be speaking to the key industry figures hoping to direct shipping through the potential pitfalls and quizzing the international diplomats who are locked into an increasingly complex game of political poker.
So what does a good outcome from Copenhagen look like for shipping?
As far as the shipping industry is concerned, the key issue at stake will be the International Maritime Organization’s mandate to retain control of the greenhouse gas issue.
Beyond that, however, the immediate outcome of the meeting is likely to be a series of questions and difficult choices, rather than direct international edicts. Copenhagen is in many ways the starting point, not the end game.
When government representatives sit down in Copenhagen on December 6 for the opening of the United Nations Framework Convention on Climate Change COP15 meeting they will be aiming to seal a replacement to the Kyoto Protocol — a process that could see rich nations spending hundreds of billions of dollars ‘greening’ their economies and helping poorer states do the same.
But given the lack of progress in recent preparatory sessions there is growing scepticism that a wider deal will be reached at all.
Even if an agreement is brokered, the likelihood is that it will be a relatively weak one, potentially with no hard targets for CO2 reduction.
Another scenario could even see the decision postponed until the next scheduled meeting in Mexico and a road map set up in place of a final decision.
While shipping remains a low-profile priority in the COP15 talks, the wider outcome of Copenhagen remains significant for shipping in that the targets being set for global CO2 reduction will ultimately decide the levels that shipping will have to meet.
Some governments, including European Union countries, may push for independent targets to be set for shipping, but in the absence of a global agreement it is unclear whether shipping would be singled out given the extensive list of more significant priorities.
However, the most immediate and important issue on the table in Copenhagen for the shipping industry remains a question of mandate rather than specific targets.
Buried in the ever-growing mountain of discussion papers due to land on delegates desks is the unassuming and somewhat confusingly titled Non-Paper 49 draft text. It contains seven key options on how to proceed with plans to reduce the shipping industry’s CO2 emissions.
The majority of options foresee a process where the IMO is mandated to develop and control a global carbon reduction mechanism, possibly with the UNFCCC setting specific targets if a wider agreement is available to guide them.
There remains, however, an outside chance that the meeting could still bow to outside political influences and decide that the UNFCCC should negotiate a new convention for maritime bunker fuel.
While it is potentially attractive to some outside the industry, there is little chance that the UNFCCC would have the time or expertise to enact such a measure and any development it chose would be far slower, and potentially more cumbersome, than an IMO-developed convention.
Transport ministries that attend IMO meetings fully understand and agree with the organisation’s position that it should be the lead authority on any international deal for shipping, but it is the governments’ more powerful foreign office or environment ministries that are leading negotiations at the UNFCCC meetings. The possibility of shipping being overshadowed by larger political and financial decisions, therefore, remains a very real concern for industry negotiators.
If the IMO can steer its way through the murkier end of the political waters at the UN climate change convention and retain its mandate to tackle CO2 reduction from shipping, the industry still faces a flurry of crucial regulatory debates that will start in earnest next year in the wake of the Copenhagen decisions.
Chief among them will be the development of so-called market-based instruments — essentially, an attempt to use economic forces as a lever to reduce the shipping industry’s CO2 emissions on a global and sustainable basis.
While technological and operational measures already under way are expected to achieve significant energy savings across the whole shipping industry, the forecast growth in world trade and fleet size necessitates a market-based approach to reduction of CO2 as well. Proposals have included cap and trade emission trading schemes and a carbon levy or tax system, which could be linked to a fund to help deliver further emission reductions.
There is also a third way under discussion which would use the energy efficiency design index already developed by the IMO as a starting point for setting targets for both new and existing vessels.
None of the current proposals are anywhere near being a finished product and all have significant political and practical hurdles to overcome, not least any directions emanating from Copenhagen.
Nevertheless, the IMO has set out a clear timetable to develop a suitable MBI and, politics permitting, aims to have an agreement in place by 2011.
Some overriding guidelines as to what the industry should be looking for have already been agreed in advance of any final decisions. The instrument should be ‘flag neutral’ in its effect to avoid distorting markets.
It should be simple to administer and, crucially, it should provide overall environmental benefit in respect to climate change. Above all, any MBI must be acceptable to all IMO member states — both developed and developing nations.
This final point will be vital to the success of any agreement, simply because the majority of the world’s fleet is flagged outside of the industrialised countries. This means that any agreement to enforce CO2 reductions from vessels must be flag neutral in order to avoid market distortions and maximise their effectiveness in reducing CO2 emissions.
Any legislation that failed to address both developed and developing world states in an agreement would effectively only cover one third of the world’s ships. Within a matter hours this would be reduced dramatically again as shipowners inevitably sought to re-flag themselves out of any competitive disadvantage.
In order to avoid this, senior officials from industry, governments and the IMO have repeatedly sought to remind those attending the UNFCCC meeting that this will only be possible if the IMO is given a strong mandate at Copenhagen.
As IMO secretary general Efthimios Mitropoulos told Lloyd’s List recently: “We support the noble objective of reducing greenhouse gases, but leaving 75% of the ships out of any regime serves the interests of neither shipping, nor safety, nor the environment.”