World’s first industry-wide climate mandate could be launched with shipping vote

A Mediterranean Shipping Company (MSC) ship, 2022. Image by dendoktoor via Pixabay (Public domain).

Since the Paris climate agreement was signed in 2015, no industry has been governed by a global treaty that sets enforceable decarbonization standards.

That could change in October, when more than 100 nations will gather at a meeting of the International Maritime Organization (IMO) in London to potentially adopt a “net-zero framework” for the shipping industry. The body finalized the draft of the framework and moved it toward adoption at an April meeting.

The shipping sector currently accounts for about 3% of human-caused greenhouse gas emissions, and maritime trade volumes are expected to increase in coming decades. In 2023, the IMO, a United Nations body that regulates shipping, approved a nonbinding strategy to decarbonize “by or around” 2050. The new framework, if it’s adopted and enters into force, will make that vision concrete and binding. Critics, however, say the framework falls short of fulfilling the strategic vision.

The framework sets exact emissions targets through 2040, when all large vessels will be required to reduce their greenhouse gas intensity by 65% from a 2008 baseline or pay substantial fees.

“That in practice means a fundamentally different energy system for shipping,” Tristan Smith, professor of energy and transport at University College London and a leading expert on shipping decarbonization, told Mongabay.

“If the [framework] is adopted, then within 15 years, the entire fleet has to completely change the energy that it uses on board, and the energy supply chains that serve the industry have to be completely pivoted away from fossil fuels,” he added.

A meeting of the IMO’s Marine Environment Protection Committee (MEPC) in London in April. Member nations voted in favor of advancing a “net-zero framework,” a draft plan to gradually decarbonize the shipping industry. The next MEPC meeting, at which the framework could be adopted, will be held in October. Image by IMO via Flickr (CC BY 2.0).

The proposed new rules

The net-zero framework is designed to incentivize the use of alternative fuels, and, indirectly, efficiency measures. Today, large vessels mainly burn heavy fuel oil — a relatively cheap byproduct of crude oil refining — or a low-sulfur variant. Cleaner alternatives include green ammonia, green hydrogen and bio-methanol. Ship owners can also reduce fuel use through a suite of efficiency measures, such as adding high-tech sails to harness wind power. However, many of the potential solutions are not yet fully developed.

The framework requires all vessels of 5,000 gross metric tons or more engaged in international shipping to reach lower and lower greenhouse gas emission intensity levels over time or pay fees. Vessels at or above that tonnage threshold account for 85% of the shipping industry’s climate impact. Greenhouse gas emission intensity is a measure of the amount of carbon dioxide equivalent emitted per unit of fuel energy content.

If adopted in October, the framework is expected to come into force in 2028. It effectively splits vessels into three categories: high emitters that pay the steepest fee, medium emitters that pay a reduced fee, and low emitters that are rewarded with carbon allowances.

Targets would initially be easy to reach, but get more stringent every year: An individual vessel would need to reduce its emission intensity by 8% by 2030, 30% by 2035 and 65% by 2040. The intensity figures are measured against the 2008 global average of 93.3 grams of carbon dioxide equivalent per megajoule of energy.

Vessels that fail to meet those “base compliance” targets would have to pay the steepest fee of $378 per metric ton of greenhouse gas emitted. Vessels that meet the targets would still pay $100 per metric ton of emissions. Vessels that reach a lower “direct compliance” target, which also becomes more stringent every year, would avoid both fees and reap rewards. For example, if a vessel cuts its emissions intensity by 21% or more by 2030, or 43% or more by 2035, it will avoid the $100 fee and receive allowances that it can save or sell to higher-emitting vessels.

Graph shows the tiers of compliance under the IMO’s net-zero framework. The framework incentivizes vessels to lower greenhouse gas intensity, with targets getting more stringent every year. Those that fail to meet “base compliance” targets would have to pay a high fee. (For most of the early years, the high fee would be $378 per metric ton of greenhouse gas emitted.) Vessels that meet the “base compliance” target would pay much less — $100 in the early years — while those that reach a lower “direct compliance” target would avoid both fees and earn allowances that could be banked or traded. Image courtesy of Transport & Environment.

Some of the fees will be used to create a “net-zero fund” that will support a wide range of research and “just transition” initiatives in Global South countries. The details of the fund and the allowances system remain to be worked out, as do many other aspects of implementing the framework.

“They left a lot of the technical details in the margins and yet to be decided,” Felix Klann, a maritime transport policy officer at Transport & Environment, a Brussels-based advocacy group, told Mongabay. “That’s part of why the deal was possible.”

For example, the framework requires a full life-cycle (“well-to-wake”) accounting of emissions from marine fuels, including upstream emissions from extraction, refining and transport of fuel — not just the emissions at the point of combustion on the ship. But decisions on how it will all be measured, which can be contentious, haven’t been made. If the framework is adopted in October, meetings on the technical details will begin the following week.

Experts expect enforcement of the new rules to be relatively strong if adopted, as with other environmental regulations passed by the IMO, including those limiting air pollution.

A Maersk ship docked in New Zealand in 2015. A.P. Møller-Mærsk, based in Denmark, has hailed the IMO’s decarbonization framework “an important step towards the first global greenhouse gas price structure for any industry.” Image by Bernard Spagg. NZ via Flickr (Public domain).

The geopolitics of shipping decarbonization

Formally, the framework would be an amendment to Annex VI of the International Convention for the Prevention of Pollution from Ships (MARPOL). There are 108 parties to Annex VI — nations that together account for nearly all of the world’s registered shipping vessels — and it is they who will decide the framework’s fate in October.

The IMO normally makes decisions by consensus, but votes can be called for contentious issues. If a vote is called in October, adoption will require a two-thirds majority. Observers of the IMO told Mongabay that a two-thirds majority would likely be reached — the framework has geopolitical momentum and the support of the industry.

“I think that the big shipping companies have recognized that decarbonization is essential,” Lee Kindberg told Mongabay. Until last year Kindberg was the longtime head of environment and sustainability for the North America division of Danish shipping giant A.P. Møller-Mærsk, often known simply as Maersk, but she spoke as an independent expert, not on behalf of the company.

“At Maersk we see the … agreement as an important step towards the first global greenhouse gas price structure for any industry,” the company wrote on LinkedIn.

One reason the industry supports the framework is that the European Union has tightened its emissions regulations for vessels in the last few years, and shipping corporations want to “avoid uneven regulation,” Klann of Transport & Environment said.

Yet there are divisions within the Annex VI parties. In April, Saudi Arabia attempted to block the framework’s advancement by calling for a vote; 63 parties voted in favor of the framework and 16 voted against, while many other parties abstained, didn’t vote or weren’t in attendance. The 16 “no” votes came mostly from countries commonly regarded as petrostates, such as Russia, Venezuela and Iran. These oil-exporting countries argued that alternative fuels are costly and unproven. There’s also at least one other likely “no” vote that wasn’t registered in April. The United States, though a party to Annex VI, wasn’t there for the vote; its delegation exited the talks earlier in the week. A U.S. official reportedly called the framework “blatantly unfair” in a diplomatic note sent to other delegations. (The U.S. State Department declined to comment for this article.)

If the April voting tally is reassuring to advocates of the framework, there’s one catch. Any combination of parties that collectively register 50% of the world’s fleet, as measured by gross tonnage, can veto it during an “acceptance” period immediately following adoption. In practice, the key countries’ positions should be evident at the October meeting.

Liberia, Panama and the Marshall Islands, which register 16%, 15% and 11% of the global fleet under their flags, respectively, hold outsized power to sink the deal. None of the three has so far shown any such inclination. Panama voted in favor of advancing it in April, while Liberia and the Marshall Islands both abstained, but not necessarily because they opposed it. Abstentions by Liberia and some other African nations were not publicly explained. However, the Marshall Islands, which has long championed shipping decarbonization at the IMO, gave a clear reason for its abstention, as did other small island developing states, mostly from the Pacific region: They wanted a stronger deal that instituted a flat levy on greenhouse gas emissions. They considered the framework, the essential components of which were introduced by South Korea as a compromise, to be insufficiently stringent. A flat levy would not only have been more effective at reducing emissions but would also have raised more funds for just transition initiatives in Global South countries, members of the island delegations argued.

Ralph Regenvanu, Vanuatu’s environment minister, condemned countries that he said had blocked progress toward a stronger deal that could have brought the IMO in line with the Paris Agreement’s target of capping global temperature rise at 1.5° Celsius (2.7° Fahrenheit) above preindustrial levels.

“Let us be clear about who has abandoned 1.5°C. Saudi Arabia, the U.S. and fossil fuel allies pushed down the numbers to an untenable level and blocked progress at every turn,” Regenvanu said in a press release. “These countries — and others — failed to support a set of measures that would have gotten the shipping industry onto a 1.5°C pathway. And they turned away a proposal for a reliable source of revenue for those of us in dire need of finance to help with climate impacts.”

Representatives of Vanuatu, Tuvalu, the Solomon Islands, the Marshall Islands and Seychelles stand with IMO Secretary-General Arsenio Dominguez (third from right) in 2024. Many small island developing states expressed disappointment at the shipping decarbonization deal that IMO parties reached in April, arguing that it was too watered down and didn’t do enough to support a just transition for Global South nations. They’re calling for more funds to go toward, for example, research and infrastructure initiatives in countries vulnerable to climate impacts. Ralph Regenvanu (left), Vanuatu’s environment minister, was among the deal’s critics. Image by IMO via Flickr (CC BY 2.0).

Coral bleaching on the Great Barrier Reef in 2017. Shipping accounts for about 3% of the world’s greenhouse gas emissions, and trade volumes are expected to rise in coming decades. Image courtesy of The Ocean Agency/Ocean Image Bank.

How effective will the framework be?

The global aviation sector has a market-based carbon offsetting scheme, but most experts consider it a weak measure. Experts consider the IMO’s net-zero framework, however flawed from a climate advocacy perspective, to be groundbreaking.

“It’s the only industry globally that has set decarbonization standards that will be enforceable,” Kindberg said. “Now that’s pretty major.”

The framework, though stronger than the aviation scheme, has drawn criticism, and not just from small island states vulnerable to rising seas and other climate impacts. It doesn’t set an absolute cap on overall greenhouse gas emissions. Rather, it limits what individual vessels can do. This means that if trade volumes rise more than expected — if more vessels hit the seas — overall shipping emissions could climb higher than projected as well.

Klann of Transport & Environment, which published an assessment of the framework in April, said the deal has pros and cons.

“The targets, even though they start on a sort of status quo level, they’re still quite ambitious, if looked at plainly,” he said.

“It’s quite an advancement to have a system like this decided as well. It’s definitely a win to have a system to negotiate about. And inherently the system also brings the opportunity to be quite stringent in the long run as well.”

And yet the framework doesn’t meet the IMO’s own 2023 strategy targets, let alone comply with the 1.5°C pathway set forth in the Paris Agreement, Klann said. The Transport & Environment assessment found that, even in a scenario of full compliance and relatively low trade growth, total shipping emissions in 2035 under the framework would be about 530 million metric tons of carbon dioxide equivalent (Mt CO₂e). To be on the 1.5°C pathway, they’d need to be 426 Mt CO₂e — 26% lower. And that gap between projected emissions and the 1.5°C pathway would widen significantly by 2040, the assessment says. (In the last decade, the shipping industry has emitted roughly 900 Mt CO₂e per year.)

An assessment by Transport & Environment, a Brussels-based advocacy group, found that the framework doesn’t meet the IMO’s 2023 strategy targets or put shipping on the 1.5°C (2.7°F) pathway set forth in the Paris climate agreement. Image courtesy of Transport & Environment.

Another problem, Klann said, is long-term reliability: later targets, closer to 2050, have yet to be set. For both “base compliance” and “direct compliance,” the targets are set for each individual year only until 2035, with one additional “base compliance” target of 65% reduction set for 2040.

Without clear later targets, and with the targets up until about 2030 relatively lax, shipping companies might not have enough incentive to invest in long-term solutions, Klann and other environmental advocates said.

“We definitely think that the levels are too watered down … and they won’t drive enough emission reduction to meet [the IMO’s] 2023 strategy targets,” Delaine McCullough, director of the shipping program at the Ocean Conservancy, a Washington, D.C.-based NGO, told Mongabay.

Both Transport & Environment and Ocean Conservancy are part of the Clean Shipping Coalition, an umbrella group of NGOs that McCullough leads. The coalition supported the flat carbon levy pushed by small island states, but McCullough said the framework at least “gets things moving, gets the institutional support [and] administration set up” and could be strengthened over time.

Author: Edward Carver

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This article was originally published on Mongabay under the Creative Commons BY NC ND licence. Read the original article.