Ship owners need to start taking measures now to lower the carbon footprint
Industry opinion among those closely watching the development of maritime CO2 regulation suggests that the IMO’s approval of mandatory EEDI and SEEMP measures is only the beginning of an evolving era of greenhouse-gas emissions (GHGs) regulation for shipping. Forward thinking ship owners and operators would do well to start taking measures now to lower the carbon footprint of their fleets and reduce their exposure to rising future compliance costs, they argue.
The IMO’s Marine Environment Protection Committee (MEPC) decision this month to adopt mandatory energy efficiency measures in design and operation of ships is set to come into force at the beginning of 2013. It will see new ships having to meet index benchmarks requiring ever more fuel efficient ships over the next two decades.
A compromise won by developing nations means flag states could seek a waiver for their obligations, delaying their compliance for up to six years beyond 2013. But this may not turn out to be much consolation for ship owners hoping to forestall the impact of a new layer of environmental regulation. And now that IMO has after many years come to an agreement to act, nor should mandatory EEDI be seen as the endgame in regulation of shipping’s emissions. Far from it, this is only the start.
The realities are:
IMO is still under pressure to come up with market-based measures, either a bunker levy, emissions trading scheme or combination to cut GHG emissions rather than just slow their growth.
The IMO decision on EEDI and SEEMP is unlikely to be enough to prevent the European Union imposing its own GHG market-based regulation on international shipping in the region.
Any widespread use of waivers by IMO member states is unlikely to insulate ship owners under their flags from the need to invest in energy efficient design in any new ship order, as of now, to protect vessel resale value.
When compared to the EU’s targets for overall cuts in emissions of 20 per cent below 1990 levels by 2020, reflected in its emissions caps for land-based industry, EEDI’s impact to only slow the growth of emissions in the maritime sector won’t cut the mustard. As Anne-Marie Warris, Lloyd’s Register’s environmental advisor, told Lloyd’s List newspaper: “The EU will keep the pressure on the IMO to get something beyond what the EEDI can deliver.”
If nothing happens quickly on MBMs at IMO to follow EEDI, the EU is expected to produce its regulatory proposals for shipping by the second quarter of 2012, with a view to implementation perhaps by 2014. And it is unlikely much will happen at IMO for at least a year.
“While the EEDI agreement may have been enough to ward off a power play from an ill-prepared UNFCCC, the European Union is far less likely to be diverted from its path of regional measures,” argues Richard Meade in Lloyds List.
“The EU will not be swayed from its chosen path of regional measures and some form of international market-based measure that will require every ship-owner to account for fuel consumption is now inevitable…”
“Owners would do well to stop viewing regional measures as a possibility and become quickly acquainted with the plethora of low-carbon support measures that are already out there in advance of any formal decision,” Meade writes.
On the subject of using waivers to forestall the need to do anything about EEDI for a few years, Meade further writes: “While talk of waivers and political loopholes may have settled a few nerves post-MEPC, the shipping industry should not be lured into a false sense of security.”
“If you are planning to order a new ship at any point in the future you will now need to make sure it fits somewhere around the top end of efficiency standards, otherwise you will not be able to sell it and trading your vessel will become increasingly difficult and unprofitable beyond 2013. If you are currently operating ships and have any desire to see them remain profitable in the future, you should be accounting for their carbon output to a near forensic degree.”
On the supply side, shipbuilders are already positioning themselves in recognition of the new realities. It appears from their reported responses that Korean and Japanese shipbuilders are supporting IMO’s EEDI decision and eyeing energy efficient vessels as the key to clawing back market share from Chinese shipyards.
The president of Oshima Shipbuilding in Nagasaki, Hiroshi Minami, told the Exim News Service “we need to focus on more fuel-efficient ships to compete”, while South Korean government officials are reported in the Maeil Business Newspaper saying the local shipbuilding industry is well placed to benefit from EEDI, boasting “the most advanced environment-friendly shipbuilding technology in the world.”
Source: Carbon Positive
