28-04-2018

Deal To Cut Emissions Sets Shipping On Path To Low-Carbon Future

Shipping fuel is nasty stuff – known as bunker fuel, it is essentially what’s left at the bottom of the barrel when everything else has been refined. As a result, it is one of the most polluting forms of fossil fuel there is and burning it releases a huge amount of CO2 as well as other harmful substances such as sulfur.

The industry uses a lot of the fuel as well – about 90% of everything we buy sees the deck of a ship at some point and shipping is responsible for 3% of global emissions – about the same as Germany. This share will rise in future as other sectors cut their emissions. Yet while other sectors have been tackling their environmental impacts for years, shipping – which was excluded from the Paris climate change agreement – has largely been absent from the battle. Until now.

At its recent assembly in London, the International Maritime Organization, the industry’s global regulator, started to make up for lost time by agreeing a target to “at least” halve greenhouse gas emissions from shipping by 2050 compared to 2008 levels and to become a zero-emission industry at some point.

The deal has had a mixed response. Lars Robert Pedersen, deputy secretary general of shipping association BIMCO, said: “The IMO has done something no one has done before: set an absolute target for emission reductions for an entire industry. It is a landmark achievement in the effort to reduce emissions, and something that every other industry should look to for inspiration.”

Emissions from shipping peaked in 2008, he added, and emissions from shipping have already been decoupled from the growth in the world economy.

But many countries such as the European Union and the Pacific Island states had wanted more ambitious targets because the deal agreed does not commit the industry to emissions cuts in line with the Paris climate change agreement.

In addition, according to climate change website Carbon Brief, a number of countries, including the US, Saudi Arabia, India, Argentina and Brazil, “reserved their positions” on the emissions target, arguing that it is too early for such a goal – a pretty extraordinary stance given how long it has taken the industry to act but explained by how dependent their economies are on shipping for their main exports – oil in the case of Saudi Arabia and agricultural products for Argentina and Brazil, while US opposition appears to be based on the Trump administration’s view of the urgency of tackling climate change and India fears that the cost of its imports will rise.

There was also opposition from most of the small group of countries that offer flags of convenience and so represent a disproportionate amount of the world’s shipping. Almost a fifth of the world’s ships are registered in Panama, for example, and it doesn’t want to see the decline of an important source of revenue.

Given this opposition, the fact that a deal has been reached at all must be seen as a good start – and the setting of an absolute emissions reduction target, rather than just agreeing to improve efficiency, is an achievement. In fact, there is an efficiency target as well – the carbon intensity per tonne of goods shipped will fall by at least 40% of 2008 levels by 2030, and work will continue on a new energy efficiency design index for new vessels.

Climate change website Carbon Brief notes that “the inclusion of the words ‘at least’ in the emissions reduction goal was crucial for getting Pacific island states on board with the deal. This is because it leaves the door open for a ratcheting up in future to be in line with the Paris Agreement’s 1.5C goal.”

The industry’s target is “subject to amendment depending on reviews”, including future reports of the Intergovernmental Panel on Climate Change (IPCC). The IPCC is set to publish a report on the impacts of 1.5C warming later this year and that and future reports could increase pressure on the industry to act.

The Clean Shipping Coalition, a group of NGOs, welcomed the deal as “potentially game-changing” but added that the 50% target “falls short of the 70-100% cut by 2050 that is needed to align shipping with the goals of the Paris agreement” and “the lack of any clear plan of action to deliver the emissions reductions, including urgently needed short-term measures, is a major concern”.

Measures that may be implemented include moves to encourage the uptake of low-carbon fuels such as LNG, hydrogen and even batteries in some cases, along with emissions trading.

Bill Hemmings, shipping director at Transport & Environment, a sustainability NGO, says that while there is some good news in the deal, “the not-so-good news is that there is far too little acceptance of the need for immediate action to cut emissions, both among industry players and in many states. Now that the diplomatic pantomime and backslapping is over, the really hard work is about to begin.”

While many involved in the industry see the deal as something that allows yet another delay in taking action, more ambitious players will start to take immediate actions to cut emissions. And laggards will start to find, like the oil and gas industry before it, that once the emissions reduction cat is out of the bag, the pressure will really start to build – from regulators around the world, investors, customers and civil society.

There is no doubt that the deal is not as ambitious as it should be, but it sets out a really important marker for the shipping industry. It will encourage companies to bring forward innovative solutions and the industry will be held accountable for its emissions for the first time. As the evidence on climate change – and shipping’s part in it – strengthens, pressure on the sector will build and progress should accelerate. The world will be watching to see how the shipping industry reacts.

Source: Forbes

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