green and sustainable business

IMO’s “Mandatory” Vessel Emission Reduction Regime

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An International Maritime Organization panel adopted what it is called “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, last month’s action is the “first ever mandatory greenhouse gas reduction regime for an international industry sector.”

It sounds like a big deal and perhaps it is. It has taken years and lots of work just to get this point. Unresolved issues still remain. The agreement by 55 of the world’s largest shipping nations was adopted by the MEPC last 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 adopted by the committee 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 maintain 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. (That could be a big uh-oh that will take many years to sort out, keeping marine engineers busy and prosperous. 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. It sound good from a free-market perspective but it’s also a recipe for fragmentation and delay.)

The 2013 effective date is probably not as firm as billed. The IMO says the regulations “are expected to enter into force” on that date. Aside from that semantic wriggle room, the fine print also provides a waiver mechanism for compliance with the EEDI requirements, a huge victory for developing countries, which are the ones doing most of the shipbuilding and registering of vessels these days. 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 invokes the waiver. Developing and island nations that dominate shipping registries have been successful in deflecting consensus on market-based emission initiatives.

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 emissions 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, Carbon War Room’s COO, 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 and the built-in loopholes the IMO sanctioned.

The IMO measures may only 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 regime were supposed to be considered by the IMO but were not.

Mandatory (and historic) resides in the eye of the beholder. How mandatory is a mandatory rule without a strict enforcement mechanism and if it can be easily waived?


Written by William DiBenedetto

9 August, 2011 at 2:00 am

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