Note: This post was prepared jointly with my colleague, professor Aldo Chircop.
Until recently, efforts to reduce greenhouse gas (GHG) emissions from international shipping were periodically raised under the UN climate regime, while the International Maritime Organization (IMO) focused on air pollution and energy efficiency of new and existing ships. The result was an absence of meaningful action under the UN climate regime and principal IMO attention remained focused on air pollution from sulphur oxides (SOx), nitrogen oxides (NOx) and particulate matter (PM), with limited outcomes addressing GHGs. The Paris Climate Agreement, negotiated in 2015, and in force since November 2016, does not allocate responsibility for emissions from international shipping to any party, but does include emissions from this sector in its overall accounting of global emissions and in global emission reduction goals. Since Paris, it has become clear that the expectation of the global community is that the IMO will implement an effective strategy to reduce GHG emissions from this sector in line with the collective long-term goals of the Paris Agreement to keep global average temperatures well below 2 degrees above pre-industrial levels, while making efforts to keep them within 1.5 degrees, a goal that will require all reasonable efforts from all sectors, including international shipping, to decarbonize as quickly as is reasonably possible.
The initial IMO effort in addressing GHGs consisted of the first study on the subject presented at the Marine Environment Protection Committee (MEPC)’s 45th session in 2000. The MEPC is the Organization’s lead structure for the regulation of the environmental aspects of shipping. The study led to the adoption in 2003 of the Organization’s policies and practices related to the reduction of GHGs from ships, triggering an ongoing review of the issue and two further GHGs from shipping studies, the most recent in 2014. At its 57th session in 2008, the MEPC adopted nine fundamental principles as reference for future discussion, namely that the future framework: “(1) must be effective in contributing to the reduction of total global greenhouse gas emissions; (2) binding and equally applicable to all flag States in order to avoid evasion; (3) cost-effective; (4) able to limit, or at least, effectively minimize competitive distortion; (5) based on sustainable environmental development without penalizing global trade and growth; (6) based on a goal-based approach and not prescribe specific methods; (7) supportive of promoting and facilitating technical innovation and R&D in the entire shipping sector; (8) accommodating to leading technologies in the field of energy efficiency; and (9) practical, transparent, fraud free and easy to administer.” The ongoing debate has been marked by substantial concern over issues of equity, absence of reliable fuel use and emissions data, and divergent views on whether technical and operational measures are sufficient to substantially reduce emissions, or whether there is also need for a market-based mechanism(s)(MBM).
The Paris Agreement triggered renewed energy in the IMO to address this challenge. The Organization’s response to that agreement’s expectations has been the adoption of the ‘Roadmap for Developing a Comprehensive IMO Strategy on Reduction of GHG Emissions from Ships’ at the 70th session of the MEPC in 2016. The roadmap commits to the undertaking of further GHG studies, intersessional work by an MEPC working group on this topic in accordance with a timeline, and ongoing work regulating energy efficiency improvements. The IMO’s intention is to adopt the initial GHG reduction strategy at an MEPC session in 2018. This will lead to the adoption of a revised strategy in 2023 providing for measures and implementation schedules for the short, medium and long-terms.
Three recent meetings in pursuit of the roadmap signaled the latest efforts of the IMO to move forward with its efforts to develop the initial strategy for international shipping, which is not currently captured by State Parties’ GHG emission reduction commitments under the Paris Agreement. The first meeting of the MEPC’s Intersessional Working Group on Reduction of GHG Emissions from Ships (ISWG-GHG 1) was held from the 26th to the 30th of June 2017 in anticipation of the main Committee meeting the following week, and reconvened in a second meeting as an intra-session working group on 6th July during the main MEPC meeting. The third meeting was the 71st session of the MEPC, held from the 3rd to the 7th of July. MEPC 71 considered the results of the ISWG and adopted the strategy outline and work plan proposed by the working group meeting for the upcoming year. MEPC’s instruction to the ISWG include the development of a structure for an IMO strategy for reducing GHG emission from ships, further consideration of substantive issues discussed at the recent meetings, terms of reference for the next two intersessional meetings of the ISWG and a progress report to the MEPC in July 2018.
The starting point for the work of the ISWG will be the draft outline of the structure of the initial strategy set out in the Report of the MEPC on its 71st Session. It includes the following headings:
• Preamble/introduction/context including emission scenarios
• Levels of ambition
• Guiding principles
• List of candidate short, mid & long-term measures with possible timelines & their impacts on States
• Barriers & supportive measures; capacity building and technical cooperation; R&D
• Follow-up actions towards the development of the revised strategy
• Periodic review of the Strategy
The agreement on the draft outline and work plan for the ISWG belies the continuing great diversity of views on the substantive issues before the IMO. Submissions made in advance of the meetings and discussions at the meetings reveal that deep divisions remain over fundamental issues. Among the key issues raised either in submissions or in discussions at these two meetings with a clear diversity of views are the overall goal, whether the Organization should adopt a target or merely aspirational goals, the guiding principles, the extent to which operational and technical measures would be sufficient, data on which the strategy is to be based, weight to be given to market and technological uncertainties, and the use or otherwise of market mechanisms. There is great concern over the potential impacts of GHG emissions reductions on developing countries and generally most submissions acknowledged the need to address the potential inequity, but with no clear indication how this could be achieved.
Many submissions appeared to support an overall emission reduction goal in some form. There are clearly divergent views on the form of the goal (e.g., whether it should include a target or cap), the level of ambition and the legal weight of the goal. Among the options are an emission reduction target or pathway in line with key elements of the long-term goal in the Paris Agreement, such as emission reduction targets for 2030, 2040 and 2050 with a commitment to reach carbon neutrality by the second half of the century. In terms of legal weight, proposals range from legally binding to purely aspirational.
With MEPC 65 in 2013 suspending discussions on MBMs to reduce GHG emissions from international shipping, the issue appears to be gaining renewed momentum in proposals from several delegations and observers. However, the MEPC has not reactivated discussion on this topic, let alone is there consensus on whether an MBM should be part of the strategy, how it should be designed, and when and how it should be implemented. Proposals submitted at earlier sessions included a levy and a cap and trade system, and views on how revenues generated should be utilized varied from keeping revenues within the industry to allowing revenues to be used to support emission reductions outside the sector. Should an MBM be included in the future strategy, possible uses of the revenues include research and development of technologies needed for the sector to become GHG emission-neutral, and efforts to protect small developing island States (SIDS) and developing States distant from markets from the adverse economic impacts of emission reduction efforts.
Guiding principles for the design and implementation of the IMO strategy constitute another area of divergence among IMO Member States. A fundamental debate is about whether the overall approach should be based on no more favourable treatment (NMFT) inherent in the IMO conventions and their enforcement, or the fundamental principle of common but differentiated responsibilities and respective capabilities (CBDR) embedded in the UN Framework Convention on Climate Change and arguably still guiding the adoption of nationally-determined contributions in the Paris Agreement, or some combination of these two principles. If there is to be differentiation, what form should it take, and how can the strategy distinguish among nation States without creating unfairness among industry actors competing in global markets? What role should the UN Sustainable Development Goals, the nine principles for addressing GHG emissions from ships agreed to at MEPC 57, and other principles and practices of maritime regulation and enforcement play in the design and implementation of the strategy?
In addition to these key questions, there are many other issues to be resolved in the negotiations ahead. Among them are the following:
• How will the strategy address the need for emission reductions in the existing fleet and ships under construction, as well as future new ships as of the date of effectiveness? What will be the role of existing and ongoing technical and operational regulatory efforts adopted in Annex VI of the International Convention for the Prevention of Pollution from Ships, 1973/78, such as the Energy Efficiency Design Index (EEDI), the Ship Energy Efficiency Management Plan (SEEMP) and the recently established fuel consumption database?
• What will be the role of port States, flag States, insurers, ship owners, charterers, crews, etc., in the implementation of the IMO strategy, and with respect to compliance and enforcement? What role will be played by the various memorandums on port State control, consisting of regional agreements between national maritime administrations, in particular with respect to ship inspections normally based on the NMFT principle?
• How do related issues, such as black carbon, air pollution and economic opportunities associated with the transition factor into the design of the strategy? Are there ways to integrate these, or should the IMO strategy focus only on GHG emissions?
• What are the economic consequences (for industry actors and/or nation states) of the various possible approaches? How should they affect the design and implementation of the overall strategy?
The IMO negotiations on its initial GHG emission reduction strategy has clearly picked up momentum since 2015. The Paris Agreement and the shipping industry’s desire to retain this issue within the IMO in preference to other global fora are at least partly responsible for this. The Paris Agreement sets ambitious long-term goals that cannot be met without addressing GHG emissions from international shipping. Furthermore, the agreement itself puts pressure on the shipping industry to do its fair share to the global response to address the climate challenge. Prospects for an IMO strategy that promises delivery of a fair contribution from international shipping to global GHG emission reduction efforts and positioning of the shipping sector to thrive in a carbon neutral world are stronger after these three IMO meetings, but most of the hard work remains. The next twelve months will be critical for the development of the IMO GHG emission reductions strategy.
Professor Chircop and I would like to thank the Centre for International Governance Innovation (CIGI) for its generous support of our research on GHG emissions from international shipping, including the background research for this post. For more information about CIGI, see https://www.cigionline.org/.
Professor, Schulich School of Law
Note: This post was prepared jointly with my colleague, Professor Aldo Chircop.