UN Shipping Group Moves on Vessel Emission Reductions

An International Maritime Organization panel adopted what it calls mandatory design and operational measures to reduce greenhouse gases from international shipping.

According to the IMO’s Marine Environment Protection Committee, which has met 62 times on this issue, this month’s action is the “first ever mandatory greenhouse gas reduction regime for an international industry sector.”

It sounds impressive but it has taken years to get this point and lots of work and unresolved issues still remain. The agreement by 55 of the world’s largest shipping nations was adopted by the MEPC this month.

IMO is the United Nations agency with responsibility for the safety and security of shipping and the prevention of marine pollution by ships.

The measures will mandate an efficiency rating system known in UN-speak as the Energy Efficiency Design Index (EEDI) for new ships and the Ship Energy Efficiency Management Plan (SEEMP) for all ships.

Under EEDI, each new vessel over 400 gross tons ordered from January 1, 2013, would require a survey of fuel efficiency and have an International Energy Efficiency Certificate issued. Under SEEMP, new and existing ships will have to keep on board a ship-specific energy use management plan during operation.

The EEDI is a performance-based mechanism that leaves the choice of technologies to use in a specific ship design to the industry. As long as the required energy-efficiency level is attained, ship designers and builders are free to use the most cost-efficient solutions for the ship to comply with the regulations.

The 2013 effective date could slide however because the IMO says the regulations “are expected to enter into force” on that date. The fine print also provides a waiver mechanism for compliance with the EEDI requirements, a victory for developing countries. Those nations, led by China, Saudi Arabia, India and Brazil, will be allowed to apply for a waiver that would delay application of new ship construction standards in their jurisdiction for up to five years. This could lead to significant weakening of the impact of EEDI as ship owners based anywhere could choose to flag new vessels in a developing country that applies the waiver.

Developing and island nations that dominate shipping registries have been successful in deflecting consensus on market-based initiatives.  For a related story, see 3P’s “Rough Seas for Shipping Industry Emissions Agreement.”

Despite the apparent waiver loophole, the Carbon War Room called the IMO’s move “historic.” It says the standards will save the shipping industry $5 billion and more than 20 million tons of CO2 emission per year. The Carbon War Room is an NGO that aims to “unlock global gigaton scale greenhouse gas emissions reduction through entrepreneurial means.”

Peter Boyd, COO of Carbon War Room, added: “Today’s new standards, if applied to all ships (and) not just newbuilds, would save the industry more than 220 million tons of CO2 and $50 billion a year. This is a historic move by the IMO but there’s a bigger environmental and economic opportunity out there that’s too good to miss.”

Whether that larger objective is achievable remains highly uncertain, given the competing interests involved. For the moment it’s a step forward.

The IMO measures may slow growth in shipping emissions over coming decades rather than bring about absolute reductions. More extensive market-based measures to really cut emissions, through a bunker fuel levy or emissions trading were supposed to be considered at this month’s meeting but were not.

Mandatory resides in the eye of the beholder and the way terms and definitions are applied. How mandatory is a mandatory rule if it can be easily waived?