(IMO, EU, MBMs)
At the end of the day, whether we like it or not, shipping greenhouse gases or CO2 is not about Naval Architects developing good solutions for ships, but getting everything you like in terms of regulation, is to a very large degree, all about politics. And that is why it is important to understand the politics of the IMO, EU, US and unfortunately also, understanding the politics of UNFCCC (United Nations Framework Convention for Climate Change).
There are three things that should be considered to approach the regulation of shipping greenhouse gases; where we stand, the present policy initiatives and most important, where we are heading. Whether we like the formula of EEDI/SEEMP adopted or not, it has been put forward as the first international agreement on CO2 regulation. It is global, it aims on reducing emissions and it is actually viewed as a great political success for IMO. Whether it is considered as a technical success can be argued of course, however from political prospective it can really be seen as a great achievement, as it is the first international agreement on CO2 regulation. However when it comes to Market Based Measures (MBM), there is a long-lasting deadlock.
At present, the IMO is primarily focused on ensuring that UNFCCC is not to take over shipping CO2 regulatory work and IMO is also lobbying the EU not to proceed on regional regulations with some, to be honest, limited success. IMO is finalising EEDI technical work while also expanding coverage of EEDI for the ship types. Nowadays, there is a lot of MEPC activity on Monitoring, Reporting, and Verification (MRV), and it looks like this is going to be one of the key topics at the next meetings.
The impact of the recent politics in the United States is that the US will keep on working for energy efficiency standards in shipping to be put into the IMO regulatory framework. Despite the Congress deadlocks or the appointment of new people in important positions, work on efficiency standards will remain a key focus area.
The EU’s old position was all about moving actively on regional GHG regulations with global coverage. Therefore, EEDI adoption at IMO was insufficient and Market Based Mechanism was not clearly stated, thus MBM was required for shipping. The EU later on changed to a new position and agreed on replacing these plans for regional MBM, with requirements to Monitoring, Reporting and Verification of CO2 emissions, possibly also against cargo carried and distance sailed. This is linked in many ways to US proposal and together with other initiatives, there is a chance this may move IMO towards a MRV consensus.
As for the UNFCCC, the outlook for a comprehensive deal on CO2 remains in doubt. In fact, the world leaders agree to sign a pledge to hold another meeting to consider changing course at a date, yet to be determined. It is slightly unfair, because it has been decided that at 2015 there will be an agreement that will enter into force at 2020 actually. From the point of experts’ view in the field, this is extremely unlikely to happen. This is also significant for shipping, as there is a fundamental disconnect between the fundamental IMO’s principle of every ship being treated the same and the UNFCCC principles of countries being treated differently. Those two principles cannot be reconciled.
The United States is putting forward an IMO efficiency standard proposal. The first proposal at MEPC59 has evolved significantly. Significant support was received at MEPC64 and the proposal in MEPC65/19 was revised. It basically contains a three phase approach. In Phase I, data collection and analysis is conducted. Baseline curves and efficiency standards are developed, either ship specific or using baselines. The Phase II is about testing of the standards on all ships, with optionally receiving ratings. The Phase III consists of full implementation with attained efficiency standards to be mandatory. In the United States IMO efficiency standard proposal, Ship Efficiency Credit Trading (SECT) remains an option. MRV (Monitoring, Reporting, and Verification) remains a core element of this proposal.
We have a “Like Minded Countries” initiative at the IMO as this informal group of 20-25 countries that have been actually meeting a lot at this last year, works on an energy efficiency proposal. They try to push towards the same direction as the United States is pushing, without necessarily supporting of the US proposal or its details. Again the goal is to agree and adopt an energy efficiency measure for existing ships. There are three options; the Japanese one, shown below, is using the annual EEOI as a basis for setting requirement levels.
The second option is an EMSA proposal, according to which, an efficiency indicator is used. The third option is a fuel oil reduction strategy from Germany. These options are all incomplete and in early stages of development, but all require MRV. The key stumbling block is that no developing countries are involved, given that the IMO tries to operate under consensus.
In EU, the proposal for the MRV has been put forward. A legislative proposal was intended to be made public prior to MEPC65, but was delayed until the end of Q3 in 2013. Indicative implementation will start at 2016 or 2017. Reporting is likely to be annual, not daily, for all ships calling on EU ports. This may form the basis of an initially voluntary MBM, to evolve to a mandatory one eventually. The linkages to proposals from US and “Like Minded Countries” may potentially create a movement in the IMO for an international MRV mechanism, although no developing countries are on-board, so this does remain uncertain.
To sum up the meaning of the above mentioned issues, an EU MRV is expected to be established by 2016 or 2017. Taking into consideration the way the policies are developed and the time needed to be implemented, the EU MBM remains unlikely this decade. The IMO MRV energy efficiency regulation agreement remains uncertain, but significant activity is expected. The IMO MBM debate will stay on the agenda, but in my opinion is likely not to be resolved without a UNFCCC agreement first, regarding the basic conflict between the fundamental principles. Nevertheless, if and when the UNFCCC actually manages to agree and implement something like a political breakthrough (e.g. a 2020 climate change agreement), we can certainly expect to see consequences on shipping and likely leading to new measures.
Above article is an edited version of Eirik Nyhus presentation during the 2013 Green4Sea Forum
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