Heavily polluting industry has taken first step to cut carbon but must go much further to satisfy climate demands
Shipping’s global regulator aims to seal
consensus this week on measures to cut
carbon dioxide emissions this decade,
which would keep alive the possibility of
a transformational international tax on
the polluting industry.
Delegates from 174 countries plus a
host of industry observers at the meeting of the International Maritime
Organization (IMO), the powerful UN
body that regulates shipping, have been
in week-long discussions over measures
to reduce the fleet’s carbon intensity by
40 per cent by 2030 compared with
Adoption of the plan would also mark
the first concrete step to implement a
strategy to cut global shipping’s emissions by at least 50 per cent by 2050.
Maritime transport, the lifeblood of
global trade, pumps out about 2.4 per
cent of annual CO2 emissions. It is tricky
to decarbonise because clean fuels such
as green hydrogen, ammonia or methanol are not widely available and presently cost far more than fossil fuels.
Stakes are high for large shipping
companies including Maersk, CMA
CGM and Cosco, as well as commodity
traders such as Trafigura and Cargill
that have strived to drive transport
costs down, with decarbonisation estimated to cost trillions of dollars.
The real importance of the meeting,
in the view of many officials, hinges on
whether the member states can emerge
without divisions on climate change
that would make an agreement on a carbon levy on international shipping an
even more formidable challenge.
“Adoption of actual short-term measures this next week is another critical
time,” said Kitack Lim, secretary-general of the IMO. “Without this one, we
cannot develop our further ambition by
The so-called short-term framework
includes two parts: an energy efficiency
index for existing ships, plus a requirement to improve carbon intensity of
vessels between 2023 and 2030. The latter connects CO2 emissions to cargo volumes — which are likely to rise — rather
than assessing absolute emissions.
Members on Monday agreed a 2 per
cent annual reduction in carbon intensity for ships between 2023 and 2026.
Environmental groups have
denounced the measures as underwhelming and verging on inconsequential. One European delegation adviser said the carbon intensity requirement
was a “paper tiger” with a lack of an
The re-emergence of the US as a force
in climate talks has bolstered the coalition of EU states and some Pacific
Islands pushing for a greater ambition,
but the approach also opens up the risk
of a “failure to decide anything”, in the
words of one European delegate.
Developing countries, particularly in
Latin America, are deeply concerned
about a hit to their trade-dependent
growth and higher costs of basic goods
caused by tighter environmental rules.
China and Russia remain major opponents of meaningful action, European
“It’s the developed world telling the
developing world to stay where they are.
Growth of world trade is in developing
countries,” said Edmund Hughes, who
was a senior IMO official for 10 years.
The question in the months and years
ahead is whether the slow-moving, consensus-focused IMO can accelerate seri ous negotiations about putting a cost on
shipping’s carbon emissions and
whether companies’ lobbying matches
their public messaging.
“Policymakers are sitting on the most
significant historical mandate to decarbonise shipping,” said Rasmus Bach
Nielsen, global head of fuel decarbonisation at commodity trader Trafigura,
who believes the IMO needs to agree on
a carbon levy by 2023 that begins two
There are signs of sea change from within the industry itself. This month
Maersk, the world’s largest container
shipping group, suggested a $50 per CO2
tonne tax starting around 2027 that
rises to more than $150.
The industry has also proposed a payment of $2 per fuel tonne, equivalent to
$0.7 per CO2 tonne, to create a $5bn pool
for research and development for clean
fuels. But many delegates are concerned
that this will be used as an excuse to
delay the introduction of a substantial
An unlikely pair of candidates — the
Marshall Islands and the Solomon
Islands — have put forward the only proposal for a meaningful financial incentive to decarbonise shipping at $100 per
CO2 tonne. The Marshall Islands is
emblematic of the tensions. Its islands
are mostly low-lying and at risk from
global warming. At the same time, it has
a large shipping registry and has typically aligned itself with the industry
“If we look at IMO as a huge ship, then
we have to start turning now from the
iceberg ahead,” said Albon Ishoda, a delegate from the Marshall Islands. “If
we’re allowed to have a transformational discussion, then that would drive
progress on the ground.”
Lim of the IMO said the key to avoiding a confrontation over a tax was in
how the money raised would be used. “If
everybody thinks we can benefit from
market-based measures, if it’s by the
developing side as well, then this will
actually provide momentum.”
Shipping groups are likely to also
stake their claim on the money. “If it
goes into general government funds,
then in the end those costs will be passed
on,” said Rolf Habben Jansen, chief
executive of Hapag-Lloyd.
Ultimately, the industry increasingly
fears that its influence over regulation
could be slipping away and it risks simply being branded a laggard on climate
“The worst thing for the global shipping industry is to have a patchwork of
regional schemes,” said Anne Steffensen, chief executive of Danish Shipping, a trade body.
The EU is expected to propose next
month the widening of its emissions
trading system to include maritime
If Brussels targets extraterritorial
journeys, it will send shockwaves
through the slow-moving world ofshipping.