IMO and EU may want the same thing, but they are not the only ones with differing opinions on the road to carbon reduction in shipping
THERE is a political fog around shipping when it comes to shipping and the issue of its CO2 emission. It may be because the road forward has a number of possible routes, and some influential shipowners, lobby groups, and political advocates see some of these roads as being more beneficial to themselves than others.
Fathom-News has heard from various sources that ship-owner lobby groups remain unable to find a unified voice on the way forward while green lobby groups are still trying to create additional pressure on the IMO, mostly by claiming its member states are not doing anything.
And the European Union, along with its member states are even at odds with each other over how they can be at odds with the IMO.
Also the various directorates of the European Commission still do not see eye to eye. DG CLIMA, which is responsible for Europe’s response to the Paris Agreement, has a broader inclusive approach to greenhouse gas reduction, while DG MOVE which is pushing for more sustainable transport policies has a differing agenda. DG ENV also has its own agenda and goals that add colour to the political confusion.
But despite this there are some signs that some clarity may emerge, though the cynical will probably say it will only be in time for crude oil prices to rise to a level where this once again will become a driving factor for ship operators to take stronger action over operational costs and therefore CO2 emissions.
Time to align
The IMO member states have agreed to have a roadmap, or rather, a plan for a roadmap by 2023, with an initial strategy in 2018. The final 2023 strategy will include the level by which the IMO intends to cut shipping’s carbon footprint.
The green lobby groups doubt this.
Meanwhile Green MEPS have managed to get the European Parliament to agree to proposals for shipping to be included in the next phase of the emission trading scheme which will begin in 2021. Each phase is eight years and negotiations have now gone into the three-way talks between Parliament, Council and Commission where they may yet come to nothing.
The key problem between the MEP proposal and the IMO roadmap is timing. The eight years for the ETS starts in 2021, while the IMO has pinned its roadmap to start in 2023. His may make alignment difficult.
The European Union has the agreed MRV regulation about to kick off in January 2018 but has yet to lay out all the details of how. Data collection will start on January 1 2018, with all relevant ships needing approved plans. The first data will be coming in by May 2019.
Whether this will provide any meaningful data to allow specific measures to be implemented in Europe is debatable. Data experts have said that two years worth of data, at the very least, should be collected before any decisions on additional CO2 reduction measures are made.
Rumours are that the European Commission may already be looking at putting forward alignment proposals but some experts have warned of policy issues that may prevent this. Concerns include whether the Europe rules can even accept GHG related data collection without verification and the lack of transparency of the data to be collected under the IMO proposal.
Commission sources have confirmed with Fathom-News that once the IMO global data collection system is finalised by the adoption of the guidance documents setting out details of the system, the Commission is obliged to review the EU MRV system with a view of possible alignment of it with the international one.
However they add that the robustness of the global IMO scheme, and crucially this includes any verification guidelines, will be a key parameter in such an assessment. Sources also say that the alignment process will take “around two years” due to it involving first a proposal form the Commission and then the required involvement of the Council and the European Parliament.
The IMO plans will become the third part of current plans to create global CO2 rules. Shipping already has regulations on the design of vessels and energy efficiency management (EEDI and SEEMP).
Timeline: Data collection for the EU CO2 data collection scheme starts on January 1 2018, and the IMO global scheme, January 1 2019. the earliest date for alignment of the two would be 2020. Green lobby groups and MEPs want the IMO to have a roadmap by 2021, including emission targets, otherwise shipping may be pushed into the fourth phase of the European ETS, while the IMO has set a date of 2023, with a first draft in 2019.
A big ask
For both organisations the question is what will they do with the CO2 data once they have it. In short it will be used to determine the level with which individual ships and therefore ship operators, will have to pay to emit CO2.
The thorny issues here include what form this will take, who gets any revenues from any scheme and how severe it will be. And this is where even the shipowners themselves are struggling to find agreement.
Will the industry be more in a favour of a bunker levy, an independent fund, or the proposed inclusion in an emission trading scheme? And what will policy makers prefer. The creation of a standalone emission trading scheme just for the shipping sector will be costly and a huge administrative burden, whether it is for global shipping or only those vessels caught in the European scheme. A fund is by comparison much more straightforward to create and administer. And moreover both the IMO and the EU have experience of this.
If shipowner lobby groups appear too reluctant to engage in a CO2 reduction scheme, especially when the Paris Agreement has shown a societal desire for greenhouse gas reductions, it will likely be seen n a poor light, yet if they let policy makers have a free reign then they will likely get the ire of some shipowners who feel that the CO2 transport burden is too heavily placed on them.
So what of the green lobby groups? It is easy to dismiss the environmental lobby group as wanting the impossible, even Transport and Environment, one of the environmental lobby groups in Europe believes the mainstream press gives it little coverage because it is often seen as a group of left wing environmentalists seeking to disrupt the industry. What is perhaps slightly ironic is that T&E gets annual funds from the EU, the very institution it spends a lot of its time lobbying.
Its position on environmental issues is usually far more direct than the voice of the ship-owners which tends to be less vocal but perhaps more influential behind the scenes. Any shipowner will know that T&E wants to see shipping brought into the European Emission Trading Scheme which is currently under revision.
Owner groups such as ECSA and ICS believe that any future reduction targets and measures should be covered by IMO, though that may because they also may see themselves having more influence on any final outcome in London rather than Brussels.
T&E acknowledged with Fathom-News it would rather see a global CO2 reduction solution rather than a regional European one. But they have little faith in the IMO members coming up with a robust solution, so will continue to lobby Europe to get shipping into the ETS.
Yes, this is a political lobbying game, and T&E acknowledges this, but also says it is an environmental insurance policy should IMO fail to agree anything, pointing out that its track record has been far from encouraging.
A fund?
What the green lobby groups want to see is either owners pay for the emissions of individual ships through an ETS system, or they are permitted to forgo that and pay directly into a relevant maritime related CO2 mitigation fund. T&E cites the existing NER300 Fund which performs a similar role to the fund proposed by the Shipping in ETS revision proposal agreed by the Parliament.
The ETS works on a cap and trade method whereby emitters are allocated allowances, permitting a certain volume of greenhouse gas emissions, Emit too much and you either pay a fine or buy allowances, Emit less than your allowance and you can sell unused allowances to those that need it. The EU generates revenue which is fed into the fund.
Applying the criteria for this fund to a shipping specific one would appease some shipowner groups say the lobby groups, who point out that it was the owners that came up with the idea in the first place.
The other option being considered for shipping is a bunker levy, applicable on fuel purchases, in short an additional cost per tonne of fuel used, but again revenues generated hopefully channeled back into the shipping industry through a dedicated fund.
And as a final word, while critics say Brussels has been unfairly putting pressure on the IMO to bring forward its roadmap plan or it will make its own measures, it needs to be considered that Europe gave the IMO €10m recently to establish a network of maritime technology coordination centres in developing countries that can enhance the deployment of CO2 reducing technologies and policies.
Fathom-News
editor@fathom-mi.com
