Industry intends to continue making strides to reduce its environmental footprint.
By Chris Dupin
Will the lack of progress at the United Nations Climate Change Conference in Copenhagen (COP15) in December take the wind out of the sails in the effort to reduce carbon dioxide emissions in the shipping industry?
The International Maritime Organization is hoping to keep efforts to reduce greenhouse gases moving forward when its Marine Environment Protection Committee (MEPC) meets March 22-26.
Speaking at the COP15 meeting in December, IMO Secretary-General Efthimios E. Mitropoulos said regulation of greenhouse gas emissions from shipping should be the work of the IMO, because it was called for in the Kyoto protocol, and because the IMO has more than 50 years experience in creating treaties to control air and water pollution.
While Mitropoulos expressed concern that COP15 did not achieve a legally binding instrument, he said the accord issued at the end of the meeting was a step in the right direction.
He said the IMO is pursuing greenhouse gas reduction in three ways:
' Technical measures applied to new ships that a 2009 IMO study forecasts could reduce emissions by 15 percent to 30 percent depending of ship type and size.
' Operational measures for both new and existing ships that could create a 20 percent reduction on a ton-mile basis.
' Market-based reduction measures to provide emission-cutting incentives to the shipping industry.
Fully implemented, the three approaches could deliver 'the required greenhouse gas emission reductions from ships engaged in international trade,' Mitropoulos said. An IMO study said international shipping in 2007 accounted for about 2.7 percent of global carbon dioxide. According to the World Shipping Council, containerships account for about 25 percent of that amount.
But with a lack of an agreement on an emissions trading scheme in Copenhagen, some shipping companies fear a similar impasse may occur when national representatives gather at the IMO.
Last year, a group of national ship owners' associations from Australia, Belgium, Norway, Sweden and the United Kingdom proposed a 'global emissions trading system,' which it said would 'provide strong incentives for the industry to reduce emissions through ever-increasing efficiency and innovation, as well as funding for climate change adaptation and mitigation measures.'
The associations said they expected delegates in Copenhagen 'would agree in principle to include international shipping in any post-2012 climate regime,' expressing concern that without such an agreement different world regions may introduce different carbon reduction schemes for shipping.
'This could lead operators to re-register their vessels in flag states that are not covered by any one system, or reroute their ships, in order to avoid any costs of compliance. This would not only undermine the effectiveness of global reduction targets for CO2 emissions, but also place some shipping companies at a competitive disadvantage. A global framework would ensure a level playing field ' only an agreement at this level will deliver a system that is fair,' they said.
A senior U.S. shipping executive said the problem with the carbon-trading proposal 'is not that it is impossible to do, it is just that it is so vague as to how it would work. And the premise of applying it to shipping is that you would have an international cross-sector market for trading carbon allowances. It's pretty clear from the Copenhagen conference that that ain't happening.'
An alternative approach has been proposed by Denmark to require ships to buy fuel at registered bunker dealers who would collect 'contributions' and transfer them to an administrator who would allocate the revenues to mitigation and adaptation activities in developing countries and research and development projects.
But there are big questions about whether such an international sales tax on bunker fuel would be politically palatable in the United States and other countries, and how such funds would be distributed.
In January, the World Shipping Council proposed a 'vessel efficiency system' where ships would have to meet fuel efficiency standards and those that did not would pay a fee managed by the IMO and used for research and efforts to reduce CO2 emissions. WSC said its proposal was similar to those floated by Japan and the U.S. government.
There are also questions about how the U.S. Environmental Protection Agency's announcement in December that it had determined that greenhouse gases are a threat to public health and welfare will affect the drive to reduce carbon dioxide in shipping and other industries.
The announcement could act as a spur to legislation and approval of international treaties to reduce carbon dioxide emissions, or legislators might be inclined to let EPA take the lead in efforts to control greenhouse gases.
The World Shipping Council, which represents liner-shipping companies, said one of its concerns is that greenhouse gas reduction efforts recognize that shipping is the most energy efficient form of transportation.
'Consequently, a central challenge lies in developing a regime that not only stimulates even greater improvements in the energy efficiency of the world's fleet, but a regime that does not produce an unintended consequence of shifting the transportation of goods to other transport modes (and their consequent increase in emissions) or otherwise discouraging maritime transportation,' the council said in a paper last year.
WSC noted that while it takes 10 grams of carbon dioxide to move a ton of cargo a kilometer by ship, it takes 21 to move it by rail, 59 by truck, and a whopping 470 by air.
It also notes that ships are becoming more efficient. It cites a Lloyd's Register study that found the fuel efficiency of 4,500-TEU ships improved 35 percent between 1985 and 2008. Bigger ships are even more efficient, and the council said carbon efficiency on a per-mile, per cargo volume basis has improved 75 percent in 30 years as a result of technological improvements and the utilization of larger vessels.
The result of the COP15 'can be described as disappointing, but it is also clear that expectations had been set too high,' said, Eivind Kolding, Maersk Line chief executive officer. He said he was hoping for an agreement among the member states when the IMO meets.
Maersk said it would 'welcome clear and unambiguous IMO rules on emissions to cover international shipping,' and 'regulation of international shipping requires a global approach. Otherwise, it is hard, if not impossible, to avoid carbon leakage and climate reflagging to countries with the lowest environmental denominator.'
Maersk Line said it reduced its CO2 emissions by 15 percent per container moved from 2002 to 2008, and has committed voluntarily to an additional reduction of 20 percent per container from 2007 to 2017. Maersk Tankers has committed to a 15 percent reduction of CO2 emissions per cargo unit by 2016 relative to 2007.
Car carrier company Wallenius Wilhelmsen said that it reduced CO2 emissions 18.1 percent from 2004 to 2008.
Both Maersk and Wallenius Wilhelmsen participated in an event by the 'Carbon War Room,' a group organized by Richard Branson, Virgin Group founder, which said it is seeking to 'harness the power of entrepreneurs to implement market-driven solutions to climate change.' The group claims available technologies can substantially reduce both carbon dioxide emissions and eliminate black carbon soot, which it said is a leading cause of Arctic ice melt.
Melanie Moore, global head of environment and quality at Wallenius Wilhelmsen, said her company was attracted to the group's ideal to 'put all the brains and energy into the right use of technology and right operations practices to keep that reduction going. That's the sign of leaders, even when there are big meetings like this one in Copenhagen that don't reach the level expected, that you still have a plan in mind. We are very firm when it comes to carbon dioxide emissions, and that is continuous reduction curve.'
She said taking steps like slowing ships and cleaning the hulls can reduce both emissions and operating costs. While reducing the speed of ships has been easier in the current economic slump, she said the shipping industry faces a challenge when business picks up.
'I think there is still some way to go in terms of convincing all levels of the organization in manufacturing companies that optimization of the supply chain is the key, and it is not necessarily the speed of the individual component. If a supply chain manager optimizes the supply chain, they could actually reduce the speed of ocean transport and make a better connection on the land end,' she said. 'As we come out of this current market situation, that's the key that we are trying to use with our customer in order to keep our environmental footprint down.'