Nations haggle over targets to reduce shipping’s massive emissions

In a grey, squat building overlooking the River Thames in London, high-level talks began Monday on how to clean up an industry that accounts for more than 80% of world trade – and emits more carbon dioxide into the earth’s atmosphere each year than Germany.

The effects of shipping on the climate are seldom considered as much as with airplanes or cars. But it’s still a big polluter, responsible for nearly 3% of man-made CO2 emissions. Seaborne trade is expected to grow even larger by 2050, making the energy transition – or lack thereof – all the more important in the industry.

This week’s talks are being led by the London-based International Maritime Organization, the global regulator, and are part of a long and slow series of international gatherings about what green goals the industry should aim for and how it might get there.

A major new target should be in place by the end of this week, but the exact wording is yet to be determined. In a draft document seen by Bloomberg News on Friday, the industry agreed to reach net zero “around 2050.”

After all, meeting the Paris Agreement’s goal of limiting global warming to 1.5 degrees Celsius above pre-industrial levels is not just about when shipping needs to reach zero, but also about the emissions from doing so. Last week’s draft, while including “tentative checkpoints” for 2030 and 2040, fell short of similar proposals from the US, UK and Canada, and EU countries.

However, any kind of net-zero target by 2050 would be a step forward: international shipping’s current target of reducing emissions by then is only 50%, falling far short of the Paris Agreement.

In the end, a goal is just a goal. It is not binding in itself. Ultimately, if industry is to actually reduce its carbon emissions, it will have to burn fewer of the petroleum-derived fuels it relies on today. There are many possibilities for the future, the most obvious being the use of low-carbon or zero-carbon alternatives such as green methanol. But it’s not just about new fuels: ships can also be designed more efficiently, using the wind to move through the water, or even catching it
your CO2 on board.

Transitioning on this scale is far from easy. Industry consumes hundreds of millions of tons of fuel every year. Producing this large quantity of substitute products – or possibly even more, given the relatively high energy density of oil – is an enormous challenge. In addition, it must be available practically anywhere in the world. And ships must be able to sail on it.

One possible way to drive this type of change is to introduce some kind of fee or “levy” on emissions. More than 20 countries backed the basic idea at a global financial summit in Paris last month – although China and the US, the world’s two largest economies, were notably absent from the list of backers. Other nations have already supported the concept, as has commodity trading giant Trafigura Group and the Internationale
Chamber of Shipping, a trade association representing more than 80% of the merchant fleet.

“It looks like the IMO is about to adopt some very ambitious greenhouse gas reduction targets,” said Simon Bennett, ICS Deputy Secretary General. “But it is not yet certain that governments have the will to quickly develop the radical measures, such as the levy-based fund and reward system proposed by shipowners, that will be necessary to make such lofty ambitions plausible.”

Another possible approach is to limit the amount of greenhouse gas emissions in relation to energy consumption on ships. EU countries have submitted documents to the IMO proposing such a measure, arguing it would give shipping companies and fuel suppliers the predictability they need to invest in decarbonisation.

These ideas are very much on the table at IMO. And while no final decisions are expected at this week’s meeting, the organization must take action at some point – otherwise it risks becoming irrelevant while others move forward.

Large shipping companies are already taking steps. AP Moller-Maersk A/S has ordered 25 ships that can run on green methanol. Rival container shipper CMA CGM expects to deliver 24 biomethanol-powered and e-methanol-capable ships by 2027. Last year, for the first time, the majority of ships on order (by gross tonnage) were able to run on alternative fuel — including liquefied natural gas.

The EU has also already drawn up its own rules: shipping will be included in its emissions trading system from next year and it has also developed the FuelEU maritime transport regulation, which stipulates a reduction in greenhouse gas emissions in relation to energy consumption.

If other authorities follow the EU example and create their own requirements, shipping worldwide could be faced with a patchwork of different regulations, which could be a potential nightmare for such a globalized industry.

That highlights the central contradiction underlying this week’s IMO talks. As the global regulator, it alone can create far-reaching, universal rules for eliminating shipping emissions. But with so many member states – and conflicting interests – agreeing on these rules is also the biggest challenge.

Still, the organization’s secretary-general, Kitack Lim, made it clear last week that it was time to find a solution. “2023 is the year of crucial climate action for the IMO,” he said.

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