Memorandum submitted by International Maritime Organization (IMO) (EFS09)




1 Work on the prevention of air pollution and control of greenhouse gases emissions from ships engaged in international trade started within IMO in the late 1980s. The first steps were the out phasing of ozone depleting substances; both as refrigerant gases and in fire fighting systems. Later prevention of air pollution in the form of cargo vapours and exhaust gas were targeted by, inter alia, through the adoption of strict limits for nitrogen oxides and sulphur oxides in ship exhausts. In recent years the focus has been on the control of greenhouse gas (GHG) emissions from ships. IMO as a United Nation's specialized agency responsible for regulating all aspects of ships engaged in international trade, plays a key role in ensuring that lives at sea are not put at risk and that the environment is not polluted by international shipping - as summed up in IMO's mission statement: Safe, Secure and Efficient Shipping on Clean Oceans.


2 Although to date no mandatory instrument to regulate GHG emissions from international shipping has been adopted, IMO has given extensive consideration to the matter and is currently working in accordance with an ambitious GHG work plan, adopted by the fifty-fifth session of IMO's Marine Environment Protection Committee (MEPC 55) in October 2006, that is expected to culminate with adoption of binding regulations on all ships in 2009.


3 Shipping is probably the most international of all the world's industries, carrying up to 90% of global trade by weight, in a cost and energy efficient way, as well as cleanly and safely around the world. The ownership and management chain surrounding ship operations can embrace many countries; ships in international trade; and spend their economic life moving between different jurisdictions, often far from the country of ownership or registry. It should be noted that an overwhelming portion (77% of the tonnage by dead weight) of all merchant vessels engaged in international trade is registered in developing countries (countries not listed in Annex I to the UNFCCC).


Shipping and sustainable development


4 Shipping is a crucial force in sustainable development, making a massive contribution to global prosperity with only a marginal negative impact on the global environment. Both the poor and the rich benefit from seaborne trade. Moreover, due to the nature of shipping, developing countries can and do become major participants in the industry itself and, by so doing, generate income and create national wealth. However, the significant increase in global trade and international seaborne transport over the past decades (500% growth over the past 40 years) has also brought negative consequences, as does all human and industrial activity through increased emissions of air pollutants and greenhouse gases.


Maritime transport and sustainable development


5 There is no doubt that shipping is a clean, green, environmentally-friendly and very energy-efficient mode of transport. Overall, it is only a small contributor to the total volume of atmospheric emissions. Nevertheless, significant reductions in harmful emissions from ships and increases in fuel efficiency have been achieved over the past decades; through enhancements in the efficiency of engine and propulsion systems and improved hull design. Larger ships and a more rational utilization of individual vessels have also contributed significantly to reducing the amount of energy needed to transport a given unit of cargo.


6 What is often overlooked in any discussion about overall levels of GHG emissions from shipping is that the total amount of shipping activity is not governed by shipping itself, but by global demand for shipborne trade, and not only is this high, but it continues to grow. The international shipping industry is the life blood of the global economy. Without shipping, it would simply not be possible to conduct intercontinental trade, to transport raw materials in bulk or to enable the import and export of affordable food and manufactured goods.


IMO's GHG related work


7 The IMO Assembly adopted, in December 2003, resolution A.963(23) on "IMO Policies and Practices related to the Reduction of Greenhouse Gas Emissions from Ships", urging the Marine Environment Protection Committee (MEPC) to identify and develop the mechanisms needed to achieve limitation or reduction of GHG emissions from international shipping. The Assembly resolution requests the IMO Secretariat to continue co-operating with the Secretariats of UNFCCC and the International Civil Aviation Organization.


IMO Study on Greenhouse Gas Emissions from Ships


8 The 2000 IMO GHG Study is the most comprehensive assessment to date of the contribution made by international shipping to climate change. The Study estimated that in 1996, ships contributed about 1.8% of the world's total CO2 emissions, and clearly stated that there is no other mode of transport with a better CO2 record in specific terms.


9 The 2000 IMO GHG Study is currently being updated to facilitate future decisions. The contract for the update was awarded to an international consortium of renowned research institutions, co-ordinated by MARINTEK of Norway. The updating has been divided into two phases:


.1 Phase 1, covering a CO2 emission inventory from international shipping and future emission scenarios, will be reported to IMO by August 2008 for consideration by MEPC 58 in October 2008; and


.2 Phase 2, also covering greenhouse gases other than CO2 and other relevant substances in accordance with the methodology adopted by UNFCCC, as well as the identification and consideration of future reduction potentials by technical, operational and market-based measures, will be submitted to IMO by February 2009 for consideration by MEPC 59.


10 The preliminary conclusions on Phase one of the updated study was conveyed to an intersessional meeting in June this year. The main conclusion of the study was that the contribution of international shipping to global CO2 emissions from ships above 100 GT engaged in international trade was deemed to be 843 million tonnes in 2007 or 2.7% of the world's total anthropogenic CO2 emissions. The report also indicates that this percentage would rise to 3.3% (1,091 million tonnes) if ships in domestic trade and fishing vessels are included. The study projected ship's CO2 emissions to grow by a factor of 2.4 to 3.0 by 2050, assuming there are no explicit regulations (base scenario) on CO2 emissions from ships. For 2020, the base scenario predicts increases ranging from a factor of 1.1 to 1.3. These predictions take into account significant efficiency improvements resulting from expected long-term increases in energy prices.


GHG considerations within IMO


11 MEPC 57 was held in London from 31 March to 4 April 2008 and considered further follow-up actions to resolution A.963(23) on "IMO policies and practices related to reduction of greenhouse gas emissions from ships", including the progress made in line with the "GHG Work plan to identify and develop the mechanisms needed to achieve the limitation or reduction of CO2 emissions from international shipping".


12 The Secretary-General of IMO highlighted the need for IMO and the maritime community as a whole to act in concert with, and contribute to, the wider international efforts aimed at swift and substantive action to combat climate change under the UNFCCC process, by proactively addressing the principles and objectives enshrined in the roadmap agreed at the Bali Conference, out of genuine concern for the atmospheric environment. He stressed the importance for the Committee to ensure that the complex challenges associated with the limitation and control of greenhouse gas emissions from shipping were properly understood by the international community and that IMO should continue to show leadership, not only by moving in parallel, but also keeping one step ahead of the agreed UNFCCC process.


13 MEPC 57 decided, by overwhelming majority, to take the principles listed below as its reference for further debate on GHG emissions from international shipping and also for further reflection on the nature and form of the measures to be taken. A coherent and comprehensive future IMO framework should therefore be:


1. effective in contributing to the reduction of total global greenhouse gas emissions;

2. binding and equally applicable to all flag States in order to avoid evasion;

3. cost-effective;

4. able to limit, or at least, effectively minimize competitive distortion;

5. based on sustainable environmental development without penalizing global trade

and growth;

6. based on a goal-based approach and not prescribe specific methods;

7. supportive of promoting and facilitating technical innovation and R&D in the entire shipping sector;

8. accommodating to leading technologies in the field of energy efficiency; and

9. practical, transparent, fraud free and easy to administer.


14 A number of delegations expressed reservations on the principle stated in paragraph 13.2 above. The Chairman proposed to carefully reflect on the contested principle in the intersessional period and the intention of the reflection would be to reach consensus on the issue of the principles at the next session of the Committee. MEPC 57 accepted the proposal of the Chairman and encouraged Member States to submit their views to that session.


Intersessional meeting held in June 2008


15 The first Intersessional Meeting of the Working Group on Greenhouse Gas Emissions from Ships (GHG-WG 1), which was attended by more than 210 delegates comprising experts from all over the world, was held in Oslo, Norway, in June 2008. The week-long session was tasked with developing the technical basis for the reduction mechanisms that may form part of a future IMO regime to control GHG emissions from international shipping, for further consideration by MEPC 58 in October 2008.


16 The intersessional meeting in Oslo addressed market-based, operational and technical measures needed to achieve limitation or reduction of GHG emissions from international shipping.


17 In particular, the meeting further developed a formula and the methodology, as well as draft text for the associated regulatory framework, for a proposed mandatory CO2 Design Index for new ships based on submissions by Denmark and Japan. Once finalized, the index will serve as a fuel efficiency tool at the design stage of ships; enabling the comparison of fuel efficiency of different ship designs, or a specific design with different input, such as installed propulsion power, hull shape, choice of propeller or the use of wind, solar or waste heat recovery systems. With this outcome, and a number of submissions containing comments on the formula and proposals to improve the robustness, MEPC 58 should be in a position to approve the CO2 design index for new ships and agree on the final details when it meets in London in early October 2008.


18 The intersessional meeting also considered the interim CO2 operational index and identified areas where changes have been proposed. The interim CO2 operational index was adopted by MEPC 53 in July 2005 and has been used to establish a common approach for trials on voluntary CO2 emission indexing, enabling shipowners and operators to evaluate the performance of their fleet with regard to fuel efficiency and CO2 emissions. The draft CO2 Operational Index is put forward to MEPC 58 with the view to finalizing the indexing scheme at that session.


19 The intersessional meeting reviewed best practices for voluntary implementation and developed further guidance for the ship industry on fuel efficient operation of ships. The meeting considered best practices on a range of measures as identified by earlier sessions of MEPC and how they can be implemented by ship builders, operators, charterers, ports and other relevant partners to make all possible efforts to reduce GHG emissions from ship operations. Operational measures have been identified as having a significant reduction potential that can often be achieved without large investments, but would require cooperation with a range of stakeholders such as those identified above.


20 The Oslo meeting had a thorough and in-depth discussion related to the further development of different economic instruments with GHG reduction potential. Including, inter alia: a global levy on fuel used by international shipping, and the possible introduction of global emissions trading schemes for ships in international trade. Proposals for both open emission trading schemes, where ships will be required to purchase allowances in an open market; in line with power stations or steel mills, and closed schemes; where trading will only be among ships, were considered. Grandfathering or auctioning of the allowances, how the cap is set and by whom, managing of any system, banking of allowances and the impact on world trade, as well as legal aspects, were also among the issues considered. The meeting had an extensive exchange of views paving the way for further discussion at MEPC 58 in October on possible introduction of market-based measures to provide incentives for the shipping industry to invest in fuel efficient ships. However, there are still obstacles to be surmounted on how to observe the basic rules of IMO on non-discriminatory rules applicable to all ships irrespective of the flag they are flying, and at the same time respecting the special needs and circumstances for developing countries.


Further GHG considerations within IMO


21 MEPC 58 will be held in London from 6 to 10 October 2008 and will further consider the reduction mechanisms developed by the intersessional meeting, with a view to developing further an IMO regime applying to all ships. MEPC 58 is also expected to consider the related legal aspects and decide whether the GHG regulations should form part of an existing convention or whether an entirely new instrument should be developed and adopted.


22 MEPC 58 will also decide on the work needed prior to MEPC 59, to be held in July 2009, when the final adoption of a coherent and comprehensive IMO regime to control GHG emissions from ships engaged in international trade is planned.


The way ahead


23 MEPC 59 is expected to adopt the first global mandatory GHG regulations and efficiency standards for any international industry. This first package will comprise technical and operational measures that most probably will include a mandatory CO2 design index for all new ships, and a requirement for energy efficient operation of ships through the introduction of a mandatory energy efficiency management tool. The mandatory technical and operational requirements may form part of the existing regulations to prevent air pollution from ships contained in Annex VI to the MARPOL Convention. MEPC 59 is also expected to adopt non-mandatory mechanisms such as guidelines for best practices and CO2 operational indexing to complement the mandatory instrument.


24 MEPC 59 is further expected to have in place the needed framework for a future market-based instrument (e.g. an emission trading scheme or a fuel levy mechanism) and to agree on the timeframe for this part of the work.


25 The fifteenth Conference of Parties (COP 15) to the UNFCCC will be held in Copenhagen in December 2009, to adopt the successor instrument to the Kyoto Protocol. The Secretary-General of IMO will submit a position paper to COP 15, informing the Conference of the outcome of MEPC 59 on the mandatory and non-mandatory instruments, as well as the agreed work on a possible market-based instrument, to enable the shipping sector to offset its growing emissions in other sectors.


26 IMO will continue its Endeavours to reduce any environmental impacts from international shipping, a transport industry that is vital to world trade and sustainable development.


25 September 2008