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Guest Voices: Sailing Around the Paris Climate Accord?

Jul 26 2016

Shipping was left out of the historic 2015 Paris Agreement on Climate Change, yet the shipping industry pledged to move forward “in the spirit of Paris.” So far, however, it appears that shipping nations are more intent on sailing around Paris than following its principles.

The Paris agreement on Climate Change achieved two important things: it set goals for reducing the impact of climate change and it identified the measures needed to achieve the ambition. The ambition is to achieve a global average temperature rise “well below” 2 degrees Celsius. The way to achieve it was outlined in the Nationally Determined Contributions.

Shipping doesn't figure in these NDCs as it is a global activity, so it would be complicated to apportion shipping emissions to nations. Instead, the goal of reducing greenhouse gas emissions from shipping falls to the International Maritime Organization, the specialized agency of the United Nations that sets global standards for international shipping.

Kitack Lim, the IMO’s secretary-general since the start of this year, has called the fight against climate change “a top priority.” Yet, the shipping nations within IMO have fallen well short of following the Paris model.

Three things are missing: a target, measures to reach the target and a driver of change.

Shipping has an important stake in the global efforts to reduce carbon emissions. The industry’s emissions output measured 900 million metric tons in 2012, representing 2.6% of global emissions. According to an IMO study, greenhouse gas emissions may increase up to 250% by 2050.

At an IMO meeting in April 2016, two proposals were discussed to define shipping’s response to the global climate-change target. Yet it was deemed too sensitive to talk about targets, so the proposals included only fairly elusive discussions of “a fair share” and the “contribution” of shipping to emission reductions. In the most optimistic case, a “fair share” would be decided by the end of 2017, fully two years after the Paris accord.

For the moment, the only thing that has been decided is to install a working group in October 2016.

In terms of practical measures to implement, nothing really far-reaching has been put in place.

The shipping industry reduced global emissions by about 10% between 2007 and 2012, but this was the result of moderating trade growth that came in part because of the financial crisis and from “slow steaming”—the effort to reduce effective capacity by moving ships more slowly on their trade circuits.

In fairness, the IMO has managed to approve some regulations. The Energy Efficiency Design Index requires that ships built from 2025 and on produce 30% less in carbon emissions than current vessels. But it will take a long time before this will have a substantial impact considering the long life cycles of ships.

Moreover, this standard may simply codify improvements in engine efficiency that would have taken place anyway. No other measures for “decarbonizing” maritime transport have been implemented or set in motion.

Yet, there are ways in which substantial carbon emission reductions could be realized, including mandatory speed limits, more use of liquefied natural gas and alternative energy sources.

Unfortunately, there has been little to drive change toward more aggressive action. Low oil prices have lowered the appetite to apply innovative measures to reduce emissions. Market-based mechanisms, such as a bunker levy, carbon tax or an emissions trading scheme would drive the industry to act more forcefully. But no agreement could be reached on such measures despite discussions at the IMO.

Instead, participants agreed to apply a “three-step approach,” consisting of global data collection of fuel consumption of ships, analysis of the data and decision making on possible measures. The final decision on the first step will be taken in October 2016, but it will take a few years before the first data will be analyzed. So don't expect a global shipping carbon tax before 2020.

Regional pressure could get the global community of shipping nations to advance beyond the current excruciatingly slow pace. This has happened at the European Union in areas such as data collection on shipping emissions and on sulfur emissions regulation.

The shipping sector is heavily opposed to such regional initiatives, and aims for a global level playing field—global regulation for a global industry. However, every day of inertia on shipping’s carbon emissions makes actions at the European level more likely.

An EU emissions trading scheme is under review and this provides a window of opportunity. The European Parliament would like to include shipping in this scheme, and has proposed something that resembles a carbon tax, with a fund for greening initiatives in shipping and ports.

While some large shipping nations may be waiting for “winds of Paris” to blow over, this proposal points to a possible way forward that could be implemented not only in Europe but at a global level.

By Olaf Merk via The Wall Street Journal

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