MEPC 80: Pats on the back all round...?

10/07/2023

As could be expected from last week’s MEPC failure to honour the Paris accord, we begin this week with a great many stories on how the IMO fell short.

At the behest of China, Saudi Arabia (whose deserts will shortly be uninhabitable) and Brazil (whose rainforests are shrinking swiftly), targets were neutered to the point of becoming mere “indicative checkpoints” – whatever that means.

There was an agreement to cut 20% of GHG emissions by 2030, and 70% by 2040. But only if “national circumstances allow”.

To meet the Paris 1.5°C targets, cuts of 40% and 90%, respectively, would be required; but the market looks set to drastically overshoot this. To make matters more infuriating, on Friday, in deference to UN procedure, delegates spent almost the entire day lining up to pat each other on the back for a job well done.

Caught up in the maddening spectacle however, as well as the associated protests, it is easy to forget that the IMO is not a distinct entity, but a coalition of member states. A ‘failure by IMO’ is the failure by the global community. The IMO could singlehandedly move to decarbonise all of shipping overnight, if not for its members.

And these members represent governments which currently spend a combined 7% of global GDP subsidising oil and gas. They could invest those trillions into green energy instead and decarbonise the entire world well before 2040.

There would be no shortage of zero-carbon synthetic fuels for shipping, without a single new keel having to be laid. (Since January 2020, the oil and gas industry spent $393m of their profits on lobbying US congressmen – enough for a gigawatt of offshore wind energy).

But a sense of perspective is very important. Thousands of feet above glad-handing IMO members and protesters unfurling ‘Sold out to fossil fuels’ banners on the steps of the IMO HQ, more commercial flights than ever were operating, as well as 10,000 by private jet. Aviation is not bound by the Paris accord and by flying close to 0.5% of goods around the world, cargo aircraft generate 1.9% to 3.5% of all greenhouse gas emissions.

The decision to exclude shipping from the Paris agreement was initially motivated by the fact that it encompasses so much world trade and it would be economically crippling. Disproportionately penalising the shipping industry, dramatically increasing its costs, could incentivise a shift to other modes that could do far more harm than good.

The IMO’s previous target was a 50% reduction of carbon emissions compared with 2008. As a reminder, that was a year in which shipping reached a dizzying peak of profitability, shipyard orderbooks swelled with asset-play newbuilds utterly divorced from capacity demand and ships shot across the ocean, burning, with gleeful abandon, the dirtiest of fuel that could be found.

Whether bound by targets, or “indicative checkpoints”, or shipowners promising to be nice people – shipping is still the best way of getting goods across the world at a relatively low GHG cost. It carries more than three-quarters of the world’s goods and generates less greenhouse gas emissions than burping mammals.

So, pats on the back all round!