The global shipping regulator aims to seal consensus this week on measures to reduce carbon dioxide emissions this decade that would keep the possibility of a transformational international pollution tax alive for the United States. industry.
The stakes are high for large shipping companies such as Maersk, CMA CGM and Cosco, and commodity traders such as Trafigura and Cargill who have strived to reduce transportation costs, with decarbonization estimated at trillions of dollars. dollars.
Delegates from 174 countries along with a host of industry observers at the meeting of the International Maritime Organization (IMO), the powerful United Nations body that regulates shipping, were in week-long discussions on measures to reduce the carbon intensity of the global fleet by 40 per cent by 2030 compared to 2008 levels.
Adopting the plan would also mark the first concrete step in implementing a strategy to reduce emissions from global shipping by at least 50% by 2050.
Maritime transport, a vital component of world trade which releases around 2.4% of annual CO2 emissions, is difficult to decarbonize because clean fuels such as green hydrogen, ammonia or methanol are not widely available and cost currently much more expensive than fossil fuels.
The true importance of the meeting, in the view of many officials, depends on the ability of member states to emerge without divisions on climate change that would make an agreement on a carbon tax on international shipping an even more daunting challenge. .
âThe adoption of concrete short-term measures next week is another critical moment,â said Kitack Lim, IMO Secretary General. “Without it, we cannot develop our future ambition by 2023”,
The so-called short-term framework consists of two parts: an energy efficiency index for existing ships, plus a requirement to improve the carbon intensity of ships between 2023 and 2030. The latter measure links CO2 emissions to volumes of cargo – which are likely to increase – rather than assessing absolute emissions.
Members agreed on Monday on a 2% annual reduction in the carbon intensity of ships between 2023 and 2026.
Environmental groups denounced the measures as disappointing and almost inconsequential. An adviser to the European delegation said the carbon intensity requirement was a “paper tiger” with a lack of an enforcement mechanism.
The re-emergence of the United States as a force in the climate negotiations has strengthened the coalition of EU and certain Pacific island states in favor of greater ambition, but the approach also opens the risk of ‘a “failure to decide anything”, from a European delegate.
Developing countries, especially Latin America, are deeply concerned about the impact on their trade-dependent growth and rising commodity costs caused by stricter environmental rules. China and Russia remain opposed to meaningful action, EU delegates said.
âIt’s the developed world that tells the developing world to stay where it is. The growth of world trade takes place in developing countries, âsaid Edmund Hughes, a former senior IMO official for 10 years.
The question in the months and years to come is whether the slow, consensus-driven IMO can accelerate serious negotiations on pricing carbon emissions from shipping and whether corporate lobbying matches their message. public.
“Policymakers are sitting on the most important historical mandate to decarbonize shipping,” said Rasmus Bach Nielsen, global head of fuel decarbonization at commodity trader Trafigura, who believes IMO needs to get along on a carbon tax by 2023 which begins two years later.
There are signs of radical change within the industry itself. This month, Maersk, the world’s largest container shipping group, suggested a tax of $ 50 per tonne of CO2 from around 2027, which will rise to more than $ 150.
The industry has also proposed a payment of $ 2 per tonne of fuel, equivalent to $ 0.7 per tonne of CO2, to create a $ 5 billion pool for research and development of clean fuels. But many delegates fear that this is being used as an excuse to delay the introduction of a substantial carbon tax.
An unlikely pair of candidates – the Marshall Islands and the Solomon Islands – have put forward the only significant financial incentive proposal to decarbonize shipping at $ 100 per tonne of CO2. The Marshall Islands are emblematic of the tensions. Its islands are mostly low lying and threatened by global warming. At the same time, it has a large shipping register and has generally aligned itself with the interests of the industry.
“If we think of IMO as a huge ship, then we have to start turning away from the iceberg,” said Albon Ishoda, a delegate from the Marshall Islands. âIf we are allowed to have a transformational discussion, it will lead to progress on the ground. “
IMO Lim said the key to avoiding a confrontation over a tax lies in how the money raised is used. âIf everyone thinks that we can benefit from market-based measures, if it’s also on the developing countries’ side, then that will actually give a boost. “
Shipping groups are also likely to stake their claim on money. âIf paid into public funds, these costs will ultimately be passed on,â said Rolf Habben Jansen, Managing Director of Hapag-Lloyd.
Ultimately, the industry is increasingly concerned that its influence over regulation will crumble and may be seen as lagging behind on climate change. “The worst thing for the global shipping industry is to have a patchwork of regional programs,” said Anne Steffensen, managing director of Danish Shipping, a trade body.
The EU is expected to propose next month to expand its emissions trading system to include maritime transport. If Brussels targets extraterritorial travel, it will send a shockwave through the slow world of shipping.