COP26 bounce still bobbing at MEPC in spite of apparent failures

According to International Maritime Organization (IMO) secretary general Kitack Lim, the effects of global warming are no longer theoretical, but here and a “very real and present threat to our generations”.

Speaking before the IMO’s Marine Environment Protection Committee (MEPC)’s 77^th session, Mr Lim sought to carry momentum perceived to have been generated by a number of announcements for the maritime sector at the COP 26 Glasgow climate conference.

There is a perception for some in the maritime sector that this momentum stalled at last week’s MEPC77 with no new policy measures on curbing maritime emissions passed, however, for some the lack of new policy can be seen in a positive light.

Not the least of the COP 26 announcements was made by the Danish delegation, supported by the Marshall Islands, the US and UK governments to seek an increase in the level of ambition at the IMO that would see shipping achieve zero emissions by 2050. A doubling of the 50% reduction set by the IMO’s initial strategy in 2018.

For the IMO secretary general, COP 26 remained “very fresh in our minds”, and he added, “The Glasgow Climate Pact clearly underscores the need for accelerated action in this critical decade.”

On the face of it, then, MEPC77 was a failure: it failed to carry the optimism of COP 26; it failed to increase the level of ambition; there is no agreement on the International Maritime Research Board (IMRB) and no carbon levy on shipping.

Why then does climate change academic Dr Tristan Smith, of University College London, say “the IMO MEPC77 outcome was more positive for me than it has been for many commentators”?

One of the ‘positive’ failures of MEPC77 for Dr Smith was that it “helpfully” did not endorse the International Chamber of Shipping (ICS)’s proposal to “aim for net zero”.

According to Dr Smith the debate for the proposal to adopt a zero emissions policy by 2050 was very positive.

“A powerful majority wanted some type of zero by 2050, a majority that normally would be expected to only strengthen over the period to 2023, as the unfortunate impacts of climate change are increasingly experienced and governments further their national ambitions,” explained Dr Smith.

Whereas the ICS proposal for shipping to aim for ‘net zero’ which Dr Smith says is a useful term for countries reporting their ambition to the UN Framework Convention on Climate Change, precisely because those nation states have both sources and sinks of greenhouse gas (GHG) emissions such as the ability to plant trees or the sequestration of captured CO₂ from biomass combustion.

“But shipping is a sector, and it only has sources of emissions, so net zero in shipping introduces the unhelpful concept of offsetting (eg, out of sector GHG reduction).”

For many the initial IMO strategy and its targets refers to maritime sector GHG reductions, whether those targets are adequate in meeting the Paris Convention goals, to maintain global warming within 1.5˚C post-industrial revolution increase, or not.

Dr Smith believes that by adding the word ‘net’ into the proposal, the industry is “adding offsetting to the interpretation [which] will only weaken the business case for investment into decarbonisation in shipping – including investment relating to the supply of new fuels for the sector”.

“Why would you spend money on a technology if a policymaker is opening out the market to offsets that could achieve compliance at expected much lower prices?” asked Dr Smith.

Essentially, the failure of MEPC to add net to the zero-emission policy will mean that the shift to zero emissions at a later date will become more achievable.

“Transitions occur because of investment. Shipping needs massive investment to be unlocked in a set of technologies and energy supply chains that need to develop very rapidly. That investment will be needed primarily from the private sector, including diversion for investment that is currently heading to fossil fuels, including LNG,” said Dr Smith.

In this way, MEPC77 has strengthened the business case for the investment needed and sets up the potential for a very strong business case for zero GHG investment and away from fossil investment within the next few years.

Moreover, MEPC77 did not approve the International Maritime Research Board (IMRB) proposal from the World Shipping Council (WSC) and the ICS, among others. This would see a $2/tonne fuel charge added to bunker fuel that would then be collected by the IMO and distributed as a research funds to help decarbonise shipping.

“The goal for liner shipping is clear: move away from fossil fuels as quickly as possible,” said the WSC in a post-MEPC comment.

The carrier association added: “Our challenge as a hard-to-abate sector is that the technology and fuels needed for a transition to zero are not yet available. We see the direction, and now need to drive progress towards a tipping point where the technologies for zero-GHG shipping can be applied and a clear demand picture can drive availability of and infrastructure for alternative fuels.”

For that to happen the WSC argues that IMO member-states must approve the IMRB policy proposal.

However, that proposal looks “less likely to be developed as a standalone measure, which I also interpret positively,” argues Dr Smith.

He believes many companies are already investing in zero-emission-ready ships that will be able to operate on zero emission fuels, or will be capable of being adapted, to run on new fuels.

Research and development can always improve performance and reduce costs, according to Dr Smith.

He added, “There is not good evidence that there is a large barrier to first of a kind specifications from where a lot of cost reductions and initial use experience will be derived,” he said and he believes it is already well known that the major challenge for decarbonising shipping is in the higher costs of the fuels which substitute for fossil fuels.

“IMRB does not address that challenge, and this ‘opex’ challenge is much harder for national governments or companies to address – so it is more important for IMO to advance, if at all possible.”

Covid restrictions have meant that the IMO’s policy-making programme is challenged, with debating time severely curtailed by online meetings. For this reason, Dr Smith believes there is a choice between the implementation of IMRB and then a delayed mid-term measure (eg, 2027+), like a levy or fuel standard that can strengthen the business case for investment in new fuels. Or no implementation of IMRB, but a quicker implementation of a mid-term measure by around 2025.

“Based on the understanding of the barriers to the investment that is needed for the sector to be more 1.5-aligned, Option 2 is superior in my opinion, and has now become the more likely scenario because of the outcome of MEPC77,” he said.