Memorandum submitted by WWF-UK (EFS10)

WWF-UK welcomes the opportunity to contribute to this timely inquiry into an important but little-discussed source of CO2 emissions. Our responses to the questions are set out below.

 

How significant is global shipping's contribution to climate change? How is this projected to change in the future?

 

WWF understands that the provisional figure of 1,200 MtCO2 for the global shipping industry is likely to be an overestimate, and that at the 58th Marine Environment Protection Committee meeting (MEPC 58, taking place in London from 6-10th October) a central estimate of approximately 850 MtCO2 will be presented. Nonetheless, this represents around 4% of anthropogenic CO2. Global shipping emissions are greater than those of all but the 6 heaviest-emitting countries - more than the UK and almost equal to Germany.

 

Shipping emissions have roughly doubled since 1990 and the IMO forecasts continued growth as demand increases, even allowing for potential gains in efficiency. Furthermore, the sulphur particles in ship emissions, which exert a cooling effect in the short term, are likely to diminish substantially as tough new standards (that have already been agreed) come into force over the next two decades.

 

How should the UK's share of international maritime emissions be measured and included in UK carbon budgets? How fast could this be done?

 

WWF-UK advocates a global sectoral approach to tackling shipping emissions (see further under Q3). In such a scheme the responsible entity is not the country but the shipowner (just as airlines, not Member States, will have to surrender allowances when aviation enters the EU ETS). Contrary to the impression given by the Government, this does not mean that the UK should exclude these emissions from its national totals; such an argument could equally apply to all traded sectors in the ETS from 2013 and our national totals would then cover less than half of our overall emissions.

 

Even if a global scheme can be negotiated (which is far from certain), it would be prudent to include shipping in the UK's account; to ensure that the national effort to combat climate change is a comprehensive one.

 

Unlike for aviation, calculating shipping emissions from fuel sold in the UK gives a poor picture of the overall level of activity. On this measure the UK's shipping emissions (reported as memo items to our National Inventory under the terms of the Kyoto Protocol) have stayed static since 1990, despite an increase in shipping activity in and out of the UK.

WWF-UK, therefore, advocates a route-based system of accounting: emissions of ships on routes that end at a UK port would count to the UK. This is in line with the principle that the importer generates the demand for, and bears the cost of, the associated transport. This approach was judged feasible in terms of methodology and data availability at a technical workshop last year,[1] and is the most attractive option if it proves politically necessary to differentiate Annex I from non-Annex I emissions for a global climate change agreement (although please note that WWF sees this as less preferable than a global agreement).

 

 

What are the prospects of international agreements to control and reduce carbon emissions from global shipping, or to bring it within wider emissions trading schemes?

 

Bunker fuel emissions occupy a precarious niche at UNFCCC negotiations. Aviation is barely discussed, and shipping has only recently begun to get a hearing, but some Parties wish to see both sectors left exclusively to ICAO and IMO and therefore struck off the UNFCCC agenda.

These Parties (OPEC, US and others) point to Article 2.2 of the Kyoto Protocol, which states that Annex I parties should 'pursue limitation and reduction' of GHGs from these sectors working through IMO and ICAO. Article 2.2 contains a paradox that has blocked progress on bunker emissions for the past decade: IMO and ICAO are charged with tackling Annex I emissions, but IMO and ICAO do not recognise UNFCCC Annexes or operate on the UNFCCC principle of Common But Differentiated Responsibilities; rather they have apparently contradictory principles of treating all ships (or airlines) the same, regardless of nationality.

 

Over the last 18 months or so, IMO has suddenly begun to play a very pro-active role in seeking to limit GHG emissions from shipping (providing a welcome contrast to the ICAO). Work is underway on a range of measures: a design index for new ships, an operational index for existing ships, a menu of best practice options, but most importantly in WWF's view, and certainly most controversially, a 'market-based instrument', of which there are two basic variants: a cap-and-trade scheme, or a levy on emissions / fuel use.

 

Schemes of this nature have been proposed by Norway, Denmark and Germany and would apply globally, to emissions of all ships, regardless of nationality. The revenues raised (potentially tens of billions of dollars) would be spent on adaptation and mitigation objectives in developing countries. Proponents of such schemes argue that it is not possible to divide up shipping emissions in a way that is not liable to evasion, ie it is not possible to differentiate between Annex I and non-Annex I parties in the application of a market-based instrument. They argue, though, that the benefits of the revenue being spent in developing countries outweigh the costs to those countries, and that the principle of Common But Differentiated Responsibilities (CBDR) is thus respected in the distribution of revenue.

 

Opponents of a global scheme (chiefly the BRICS countries - Brazil, India, China and South Africa) do not accept that CBDR can be honoured in this way. They view a global scheme as an imposition of Annex-I style targets on non-Annex I parties (although the proposals are for operator emissions trading, so liable entity is not the country but the operator of the ship, just as airlines not Member States will surrender allowances when aviation enters the EU ETS).

 

The alternative to a truly global scheme is one that applies to 'Annex I' emissions only, but this requires a definition of what emissions can be attributed to Annex I Parties.

 

It is widely recognised that differentiation by flag is unfair (77% of ships are flagged in developing countries), contrary to IMO principles, and easy to evade; a ship can be re-registered under a new flag in a matter of hours.

A variant would be to differentiate according to the nationality of the ship owner, as many Panamanian-flagged ships (for instance) are controlled by companies registered in Annex I countries. The UN Convention on Trade and Development (UNCTAD) publishes statistics based on 'state of effective control', and the majority of ships by this definition belong to Annex I countries. But the problem still applies, if there were climate policy that imposed a cost only on ships owned by Annex I countries, there would be an exodus of ship-owning companies from Annex I to non-Annex I, much in the same way as some companies currently register in offshore tax havens where it suits them.

 

A more interesting possibility is a route-based approach (see answer to previous question). Emissions on all routes to Annex I ports would be subject to a cap-and-trade scheme or levy, regardless of who owned the ships or where they were flagged. This would impose the cost on consumers (importers) in the developed countries, as ship owners passed through costs, and it would respect IMO principles as all ships on a given route would be treated the same. The question is whether such a policy would lead to evasion, for instance by ships making an extra port call at a country on the edge of the Annex I zone (eg a ship from Shanghai to Rotterdam docks briefly at Casablanca). Research carried out for WWF by CE Delft suggests that this type of evasion might be attractive to ship owners at a carbon price of around $30/tCO2; one of the most frequently quoted illustrative prices for carbon over the next decade.

 

Our analysis of the political situation is, that many individuals within the delegations of BRIC countries accept privately that any maritime emissions scheme that was less than global in scope would lead to evasion and distortion. Notwithstanding that, the principle of CBDR is absolutely critical to their negotiating strategies in the context of the wider climate negotiations, and they fear that by granting this concession in the shipping sector they risk conceding the principle more widely. Given the stance of the United States, there is some justification for this suspicion.

 

So for example: India and China have tabled a proposal to MEPC 58, that differentiation according to nationality of ship owner should be explored further. This is a delaying tactic; it is inconceivable that they do not understand that such a policy would lead rapidly to a re-location of company headquarters to non-Annex I countries. But while this game is played out, it will be difficult to reach an international agreement on maritime emissions.

 

How well is the UK Government playing a role in developing such agreements?

 

At IMO, the UK delegation is composed of representatives of the Maritime and Coastguard Agency (MCA), who have historically dealt with more technical issues (ballast water, anti-fouling paint etc) and of DfT. Although the composition of the delegation is evolving, it is perhaps not evolving as rapidly as the agenda of the MEPC, and the UK is not among the leading voices in the debate around Market-Based Instruments. There is no 'UK proposal' that builds on work done by the Norwegians and Danish.

 

At UNFCCC, where the EU speaks as a bloc through the Presidency, it is a little harder to pinpoint the exact contribution of the UK. Again though, our sense is that the UK has played a disappointingly passive role to date, despite its stated preference to see maritime emissions included in the next global agreement. There is a tendency to place 'bunkers' in a category off to one side, rather than exploring the linkages with other elements of the climate package. To elaborate: one of the exciting features of the maritime proposal is that it could raise substantial amounts of revenue (potentially tens of billions of dollars annually) for adaptation and mitigation work in developing countries. This should be a very strong selling point when building support for such a proposal, particularly with those countries most vulnerable to climate change. But the diplomatic spadework has not been done (and the wider EU is culpable here too), the concerns of such countries over (say) the cost of imports have not been addressed (other than by WWF research) and opportunities have been missed; for instance in the recent Bangladesh-UK conference on climate change. Bangladesh has been one of the developing countries most interested in financing adaptation through a levy on bunkers, yet the Secretary of State for International Development did not mention the topic in his address.

 

Overall, the UK Government must develop a strategy for achieving its objectives in maritime emissions that is more pro-active and more co-ordinated across the different Departments and agencies that share the responsibility.

 

What are the prospects for developing new engine technologies and fuels, as well as more fuel-efficient operations?

 

Unlike the aviation sector, the shipping industry has a number of unrealised technological options to make substantial reductions in its emissions intensity, so that increasing the cost of burning fuel is more likely to drive efficiency within the sector than to limit demand.

 

For instance, the new generation of 'sky-sails', essentially huge kites harnessing the wind to power ships, could reduce fuel burn by 10-15%. Cruising at slower speeds in order to do 'just in time' deliveries of cargo can reduce fuel burn by up to 40% on some routes (figures from personal correspondence with IMO).

 

Several more detailed assessments of the mitigation options within the sector are available and we do not attempt to summarise these here. See for instance: http://www.regulations.gov/search/redirect.jsp?objectId=090000648063a431&disposition=attachment&contentType=pdf

 

What are the effects of shipping on UK air quality and public health? How well is the Government tackling this, and what more could it do?

 

There is significant harm to public health in UK port towns through emissions of sulphur dioxide, particulate matter and polycyclic aromatic hydrocarbons from ships that run their engines while berthed. Ships do this in order to power on-board electrical systems while they are in port, but with a little investment in infrastructure this power could be provided by shoreside renewable generation; and clearly this move would also have a positive impact on overall shipping GHG emissions. WWF recommends that the Government legislate to encourage or compel port authorities to include the provision of shoreside electricity in a standardised port due. In this way, ship operators would already have paid for the power and would have no incentive to burn extra fuel to provide their own. (Incidentally, the same model would work for Port Waste Reception facilities - ships would have no excuse for dumping waste at sea if they could dispose of it safely in port at no extra cost.)

 

September 2009

 

For further information, please contact Russell Cooper, Senior Public Affairs Officer, on 01483 412382 or at rcooper@wwf.org.uk

 

 

 



[1] Technical workshop on GHG emissions from aviation and maritime transport in Oslo 4-5 October 2007 - conclusions by the organisers. See http://www.eionet.europa.eu/training/bunkerfuelemissions/Conclusions%20of%20workshop.doc