Flexible approach can yield agreement on tackling greenhouse gas emissions

LAST week, Singapore played a significant role at a five-day virtual meeting of International Maritime Organization (IMO) member states.

The purpose of the meeting was to make progress, though not come to a decision, on a package of mandatory CO2 reduction measures for the existing global commercial fleet. It was held because the 75th meeting of the IMO's Marine Environment Protection Committee (MEPC 75), scheduled for March 30 to April 3, was postponed due to the Covid-19 pandemic. There was widespread agreement on the importance of maintaining the momentum in critical inter-governmental discussions on shipping's contribution to tackling the climate crisis.

Simon Bennett, the deputy secretary general of the International Chamber of Shipping (ICS), explained to The Business Times: "Because of Covid-19, this new IMO agreement cannot be finalised until the postponed Marine Environment Protection Committee convenes later this year. The intention of this week's meeting was to make best use of the hiatus by increasing understanding of some complex technical issues about which governments still hold differing views."

Unusually, reports from both the shipping industry and environmental groups broadly agree that progress has been made.

"Good technical progress made this week revealed that a properly enforced goal-based operational efficiency measure would unlock net savings for the shipping industry, as well as reducing CO2 emissions, and so looks increasingly inevitable."

That was the view of a group of environmental organisations - Clean Shipping Coalition, Environmental Investigation Agency (EIA), Nature and Biodiversity Conservation Union (NABU), Stichting De Noordzee (North Sea Foundation), Oceana, Ocean Conservancy, Seas at Risk and Transport & Environment.

Not surprisingly, the emphasis put on outcome of the week's work differed somewhat between the green lobby and the shipping industry.

The environmental groups highlighted a call to achieve absolute greenhouse gas (GHG) emissions within a decade. They thought there was a "broad acknowledgement" by country delegates that technical measures are not consistent with the Paris Agreement goals already committed to by most IMO member states.

For ICS, Mr Bennett said: "It is of tremendous political importance that IMO reaches agreement during 2020, which can then take effect by 2023."

"If, however," he warned, "in the short time available, government negotiators get the details wrong, this could have profound implications for fair competition and the future structure of the entire global fleet. If, as proposed by some IMO member states, ships were to have their statutory certificates withdrawn, for example, due to 'failure' to achieve mandatory operational efficiency targets that are beyond the ship's control, the commercial interests of many shipping companies could be seriously damaged."

However, he struck an optimistic note, adding: "Nevertheless, an ambitious and sensible IMO agreement is eminently possible, which could comprise three basic elements."

Ambitious endeavour

The first would be to reduce the carbon intensity of existing ships through use of an Energy Efficiency Existing Ship Index (EEXI), a goal-based technical measure similar to the Energy Efficiency Design Index (EEDI) which is already mandatory for new ships. One means of EEXI compliance would be engine power limitation to facilitate speed optimisation, as an alternative to earlier proposals for mandatory speed limits which most governments have already rejected as an impractical solution.

ICS is co-sponsoring a proposal on EEXI from Japan, which is supported by other governments including Greece, Norway, Panama and UAE. Mr Bennett said: "Informal discussions suggest there is likely to be consensus in support of EEXI, provided that other parts of the package can also be agreed."

The second element is the Super SEEMP (Ship Energy Efficiency Management Plan) concept. Already a mandatory requirement, it would be subject to rigorous external audit and statutory certification. Ships would be required to demonstrate that everything possible has been done, as set out in the SEEMP, to improve operational fuel efficiency.

The third and most controversial element concerns the development of so called Carbon Intensity Indicators (CIIs) as a complement to the EEXI and the Super SEEMP.

Several EU governments insist that the IMO package must also include the adoption of CIIs. This is something which many other governments might well be willing to accept in the interests of achieving a deal. But several EU States, led by Denmark and Germany, also insist on a punitive approach to the enforcement of CIIs, so that the certification required for ships to continue operating could potentially be withdrawn if the agreed CIIs are not achieved by individual ships.

Singapore is part of a coalition, also including India, Liberia, Panama, and the UAE, that accepts the development of CIIs, but proposes a form of phased implementation for three years.

Commenting on the prospects for agreement, Mr Bennett said: "Demonstrating their commitment to the 2030 target, China and Brazil have submitted their own joint proposal to IMO. It seems they may be willing accept the use of operational CIIs, as well as the EEXI and audited SEEMP.

"However, rather than punitive enforcement - whereby a ship might be unable to trade if it does not achieve the operational efficiency goals set for it - China and Brazil propose an alternative 'A-E' rating system. Due to the commercial benefits of achieving a higher rating, this should still provide a real incentive for ships to make significant efficiency improvements that would help the industry, as a whole, to achieve the 2030 target."

That proposal could be a deal breaker but, nevertheless, Mr Bennett said ICS remained confident that an "ambitious agreement" can be reached, "provided that governments can maintain open minds and be willing to avoid inflexible positions".

Singapore has been among the countries demonstrating flexibility.