The International Chamber of Shipping (ICS) has applauded many of the agreements made during MEPC 70 last week.
First and foremost, ICS has applauded the agreement by IMO to develop a comprehensive Road Map for addressing CO2 emissions from international shipping – with initial CO2 reduction commitments to be agreed by IMO by 2018.
ICS Secretary General, Peter Hinchliffe, said:
“The adoption of the Road Map is a significant decision by IMO Member States that will give further impetus to the substantial CO2 reductions that are already being delivered by technical and operational measures, and the binding global CO2 reduction regulations for shipping adopted by IMO in 2011, four years before the Paris Agreement.”
However, ICS says the IMO Road Map will go much further than the Paris Agreement.
“The final stage of the Road Map to be enacted by 2023 should establish a global mechanism for ensuring that these IMO CO2 reduction commitments will actually be delivered.” said Peter Hinchliffe.
ICS stresses that the MEPC agreement last week on a mandatory global CO2 data collection system for shipping is also a significant achievement. This will enable the initial CO2 commitments agreed in 2018 to be further refined using the very latest data on ships’ emissions and transport work which will become fully available from 2019.
Most importantly, says ICS, the IMO data system will inform the development of a mechanism by IMO for ensuring that the CO2 reduction commitments are met.
This will include deciding the extent to which technical and operational measures alone might be insufficient to deliver the IMO CO2 reduction commitments that are initially agreed in 2018. The sector actually reduced its total CO2 emissions by more than 10% between 2007 and 2012, and projections for future growth in maritime trade demand are now being revised downwards, compared to those used in the most recent 2014 IMO Green House Study.
The IMO Road Map is a significant step forward because it has the agreement of developing nations that are understandably concerned about the possible impact on the cost of their maritime trade of what might finally be decided.
ICS is pleased that the significance of the IMO agreements has already been publically acknowledged by the European Commission. ICS therefore hopes that every effort will be made by the EU to align its regional regulation on CO2 reporting by ships with that now agreed by all IMO Member States, and that the EU will support the new momentum demonstrated at IMO rather than developing unilateral measures, such as the incorporation of international shipping into the EU Emissions Trading System (which is still being discussed in the European Parliament).
ICS is disappointed that a number of environmentalist NGOs have chosen to immediately criticise the IMO Road Map and by their persistence in encouraging the EU to adopt regional regulation. CO2 reduction from shipping is a global challenge which can only be solved meaningfully by global agreement not at regional level.
Peter Hinchliffe commented:
“Unfounded criticism of the consensus that governments have achieved, in very difficult political circumstances, serves to polarise the IMO debate, making the support of developing nations for additional global measures even more complicated to achieve.”
ICS believes the initial IMO commitments on behalf of the sector, to be agreed in 2018, should reflect the spirit and ambition of the Paris Agreement but be appropriate to the circumstances that apply to international shipping and its critical role in the movement of global trade.
ICS’s member national shipowners’ associations, which represent over 80% of the world merchant fleet, are currently developing ideas on what an initial IMO CO2 reduction commitment in 2018 might entail. In co-operation with other international shipowner associations, ICS hopes to come forward with detailed proposals during 2017.
ICS has also commented on a number of other important decisions taken by the MEPC meeting in London last week.
IMO Ballast Water Management Convention
ICS has welcomed the adoption of the revised mandatory and more robust G8 Type Approval Guidelines for ballast water treatment systems, in advance of the entry into force of the IMO Ballast
Water Management Convention in September 2017
ICS says this should do much to increase the confidence of shipowners that the expensive new equipment, which they are now required to install, will be fit for purpose and acceptable to Port State Control authorities worldwide.
However, ICS is disappointed that a number of important issues will not be fully resolved until after the Convention enters into force. This includes the details of the implementation schedule, given the serious shortage of global dry dock capacity for retrofitting existing ships and hence the impossibility of meeting the current installation deadlines.
This uncertainty is further compounded by the United States, which continues to use a different type approval regime and implementation schedule to that agreed by IMO.
The impacts of the outcome of the recent MEPC discussions are complicated. But ICS will be reviewing the implications, and issuing updated advice for shipowners to assist when taking difficult decisions about the selection and installation of new equipment.
2020 Global Sulphur Cap
ICS welcomes the fact that IMO Member States have taken a clear decision about the implementation date of the global sulphur cap, confirming that the requirement for marine fuel to have a sulphur content of 0.50% or less (outside of Emission Control Areas) will be implemented in 2020. This will deliver a dramatic reduction in sulphur emissions by shipping worldwide and improve local air quality in coastal areas. But it will also have a significant impact on the economics of shipping – compliant fuel is expected to cost between 50% and 100% more than the residual fuel that most ships currently burn.
ICS says there is much to do between now and 2020 to ensure that sufficient quantities of compliant marine fuel of the right quality will indeed be available, and that this radical switchover to cleaner fuels will be implemented smoothly, in a harmonised manner, without distorting shipping markets or having negative impacts on the movement of world trade, about 90% of which is carried by sea.
“The MEPC agreement to establish a new IMO work stream to consider these important implementation issues, as requested by the industry, is therefore very welcome.” said Peter Hinchliffe.
ICS says that the clear decision about implementation in 2020 should make it easier for shipowners to consider alternative compliance options such as fitting exhaust gas cleaning systems (‘scrubbers’) or using low sulphur fuels such as LNG. However, overall uncertainty about future oil and gas prices – aside from uncertainty about likely differentials between low sulphur and residual fuel in 2020 – mean that such decisions will not be easy.
The additional cost of compliant low sulphur fuels, perhaps as much as US$ 50-100 billion a year globally, will give further impetus to efforts by shipowners to minimise fuel consumption and thus further reduce CO2 emissions.
“This major regulatory change should ensure that fuel, by far, will continue to be the shipowner’s largest operating cost providing a serious further incentive to continue reducing CO2 emissions.” commented Peter Hinchliffe.
NOx Emission Control Area in the North Sea and Baltic
ICS has also welcomed the approval of two new NOx (nitrogen oxide) Emission Control Areas to take effect in the North Sea and the Baltic for new ships delivered from January 2021. This is in line with an application by the coastal states, including the Russian Federation.
ICS says that the IMO approval demonstrates that measures necessary to address particular environmental concerns about the regional impacts of shipping can be developed by consensus within the global regulatory framework provided by IMO, without the need for any unilateral legislation.