House of COMMONS
MINUTES OF EVIDENCE
ENVIRONMENTAL AUDIT COMMITTEE
rEDUCING CO2 and other EMISSIONS FROM shipping
MR PETER LOCKLEY
DR Andre stochniol
USE OF THE TRANSCRIPT
Taken before the Environmental Audit Committee
Mr Tim Yeo, in the Chair
Mr Martin Caton
Mr David Chaytor
Memorandum submitted by WWF
Examination of Witness
Witness: Mr Peter Lockley, Head of Transport Policy, WWF-UK, gave evidence.
Q1 Chairman: Good morning and thank you for coming back to the Committee. We are taking up the subject of shipping which we have referred to on a number of occasions but have never investigated in detail; this is our first ever session, as you know. We have had your memorandum, but would you like to say how significant you think the contribution of shipping to global climate change actually is and how you see that changing in the future?
Mr Lockley: Certainly, and actually now, for the first time, we can make a
reasonable estimate of what shipping emissions are because there has been quite
a lot of uncertainty about them. The
updated Greenhouse Gas Study published at the recent MEPC meeting has come to a
consensus estimate of around 850 million tons of CO2 and that is around four per cent of global emissions of CO2. As a country, if shipping
were a nation, it would be I think seventh in the world, above the
Q2 Chairman: Shipping often gets linked with aviation in discussion about
climate change and I guess there are similarities in terms of international
activities. It is hard to pinpoint exactly
where responsibility lies and of course they are both currently excluded from
Mr Lockley: There are differences in how you would allocate emissions. It is harder to allocate emissions for
shipping; we think it is quite straightforward for aviation. Ships tend to do multiple leg journeys so,
instance, they might drop half their cargo in Rotterdam and pick some more up,
come on to the UK; they also do the same thing with fuel, it is quite easy for
a ship to tanker fuel around the world because they are very efficient at
carrying cargo so equally they are very efficient at carrying a large bulk of
fuel around the place and they can pick up wherever it is cheapest. It is harder to attribute emissions to
countries on a bunker fuels basis as you would do with aviation. As you say, they are treated very similarly
to date in climate change policy both in the
Q3 Colin Challen: In the interim advice from the Committee on Climate Change a couple of weeks ago and the eight per cent target, Lord Turner wrote that the 80 per cent target should apply to all sectors in the UK economy including aviation and shipping, but did not really seem to think that it was practical to actually measure shipping's contribution, but still thought that other sectors would have to pick up the tab if shipping was not reduced by 80 per cent. What do you make of that? What are the implications? Is this going to lead to confusion or is it the result of confusion?
Mr Lockley: I think what Lord Turner said is that our overall target has to
take account of aviation and shipping.
He cannot, at the moment, see a way in which you could include aviation
and shipping emissions within the target in a legally robust way. We can debate that, but what he has said is
that other sectors should come down further in as much as aviation and shipping
do not make an 80 per cent cut themselves.
In order for the others to pick up the tab we will have to know the size
of that tab. I think he has opened a
space where we can define what shipping emissions mean for the UK in a way that
is robust enough to adjust our overall targets accordingly even in advance of
an international agreement which may take some time to negotiate. I think there is now a bit of work to be done
and we will be pursuing this to work out what a reasonable allocation of
emissions for the UK would be for shipping so that we know the extra effort
that has to be made in the other sectors.
That is why Lord Turner was at pains to say that the overall target for
Challen: How long will do you think it will
take to actually make that
Mr Lockley: I think it need not be a very complex exercise. I think you can get quite good estimations on
the basis of imported cargo to the
Chaytor: If there is already very good data
on cargo imported to the
Mr Lockley: A route-based method would give you quite exact figures on which
ships are coming to the
Q6 Mr Chaytor: In terms of the likely estimates that would emerge, how different would they be from the Government's current system of just recording fuel taken from the international bunkers?
Mr Lockley: They would be considerably higher so at four per cent of global
Q7 Mr Chaytor: What are the downsides of the proposed route-based system?
Mr Lockley: The downsides of a route-based system would be possible evasion - ships doing extra docking - which would obviously incur extra CO2. If it were valuable enough to them to avoid the emissions on the longer part of the journey they might well do that than incur a CO2 penalty. We are optimistic that a percentage of cargo based approach could get around that. It is a variation on a theme which may be able to cut through that problem.
Q8 Jo Swinson: Two weeks ago the MEPS met; what would you say were the main outcomes of that meeting?
Mr Lockley: Firstly the market based instruments that we are interested in discussing here, there was only one sub-agenda item of a one agenda item on a long list so there was progress on things like ballast water and targeted treaties and so forth. In terms of greenhouse gases things were a little bit more fraught and more difficult. There was a long exchange in the plenary about whether it is possible to impose a market based scheme on all countries or whether you have to do a differentiated approach. In our view that exchange was not particularly fruitful; it was just a trading of positions. Developing countries raised their flag to say that any scheme should apply to Annex 1 parties only, that we should respect the principles of UNFCCC, common but differentiated responsibilities, and therefore they would object to any global scheme. In response all the Annex 1 parties raised their flags to say that this was a shipping issue, it fell under the International Maritime Organisation; the International Maritime Organisation always develops global policies and therefore any shipping has to be global. There was no rapprochement between the two sides in saying, "How can we think creatively about reconciling these two principles?" That is what we have been trying to do in finding a scheme that is both global but differentiated. We fully accept the contentions of the Annex 1 countries that it is impossible or impractical to do a scheme based only on which country a ship is registered to because it is very easy to change your flag, you can do it in about 12 hours, and if it became more expensive to operate a ship out of an Annex 1 country then there would just be an exodus to non-Annex 1 countries. Everyone acknowledges that, everyone at IMO understands that, and yet they are not prepared to go beyond that in looking at other ways in which you could differentiate a scheme. I think that exchange rather set the tone for the rest of the work on greenhouse gases and although there was progress on the technological and operational measures, there was certainly no progress on designing a global scheme. The thinking behind this - the UK was very clear on this in its submissions - is that despite the good work that IMO is doing to improve the fuel efficiency of ships, to come up with a design index for how you would rate the efficiency of ships, to come up with ship management plans, practical suggestions for reducing their efficiency, we expect the overall CO2 from ships to go up. Therefore, if we are going to have a comprehensive global climate change agreement it is going to need to cover all sectors and it is going to have to take control of shipping emissions. That, in our view, means capping emissions.
Swinson: That would suggest that in the
Mr Lockley: The
Swinson: Where would the BRIC countries come
in that? They are not quite at the stage
Mr Lockley: You have hit the nail on the head and the problem with making
progress at IMO is that the BRIC countries are reserving their position on this
question of common but differentiated responsibilities and they see it as two
important principles to concede in the IMO because they would see they had then
conceded something in the wider UNFCCC negotiation. At the simplest level you have a stand off
Q11 Martin Horwood: You have answered some of my question actually, but it was on the same sort of theme of how you resolve the BRIC countries pretty legitimate attachment to common but differentiated responsibilities. It is all very well for you to say that the revenue from this scheme would be spent in developing countries, but not according to the way they would have done it originally probably. The moral justification for common but differentiated responsibilities is that they are not as responsible for the situation we are in as the rest of us. WWF, as I understood it, had always supported that principle of common but differentiated responsibilities, so surely any kind of universal capped scheme that you are advocating conflicts with that and are the BRIC countries not justified in objecting to it?
Mr Lockley: There is a question of how you would interpret that principle. We think that potentially, with the right
governance structures in place, you can be distributing more money to those
countries than they have paid out themselves, in the case of the least
developed countries or the small island states quite substantially and the ones
most vulnerable to the effects of climate change could get five or ten times
the revenue that they were subject to pay.
We are also looking at possibilities for exempting the least developed
countries. You could do that, for
instance, on ship size because smaller ships tend to trade with developing
countries. There are ways in which you
could design a scheme to exempt the smallest and most vulnerable
countries. Do I think
Q12 Martin Horwood: So that would be a levy rather than a cap and trade scheme.
Mr Lockley: We are agnostic on whether we do a levy or a trading scheme, but what we are talking about now is the scope of any scheme that you choose to do.
Q13 Martin Horwood: This would be insanely difficult to administer. You would have levies on some bits of ships' cargo but not another bit.
Mr Lockley: If you did a scheme that looked at each individual bit of cargo and
where it was going, yes I think that would be administratively quite
difficult. Otherwise, from a design
point of view, that is probably the ideal way of doing it but the data
requirements are quite heavy, whereas simply taking a percentage would be quite
simple because we know the overall percentage of imports to the
Q14 Martin Horwood: Let me just get this straight, so you would apply the levy or the cap at almost a national level, a governmental level, not on the ship itself as it docked.
Mr Lockley: No, these would be operator based schemes so the levy would be on the ship operators and owners, but only for trade that they were doing to Annex 1 countries. It is not coming in at a government level.
Q15 Martin Horwood: Can you tell me what your impression of the UK Government's position on these different mechanisms?
Mr Lockley: They have pegged themselves to a global scheme. They said they were interested in exploring the sorts of thresholds I was talking about where you say that this scheme only applies to ships over a certain size as a way of exempting the most vulnerable countries, particularly the small island states who are most reliant on shipping for food imports. They are prepared to consider differentiation at the margin but essentially their position is to have a global scheme. However, as I said they are not able to really deliver on how they would spend the revenue because it is based on hypothecation or international taxation. This is quite a difficult position for them to reconcile because domestically they are saying that shipping is an international industry and perhaps best dealt with internationally and we do not want to take those emissions within our own targets, but as soon as there is any money going then the Treasury would like to have a portion of that.
Q16 Martin Horwood: So you are saying basically that the British Government position is inconsistent with itself.
Mr Lockley: Yes.
Q17 Chairman: Indeed is VAT not an international tax as far as the 27 EU countries are concerned?
Mr Lockley: If you wanted to change the VAT structure on shipping, yes.
Q18 Chairman: I meant in terms of the Government's position about international taxes. We accept that we do not have complete freedom to set VAT rates in this country and the proceeds are now essentially an international tax.
Mr Lockley: The proceeds go into the
Q19 Chairman: Not quite all of them; some of them go to pay for the running of the EU.
Mr Lockley: My understanding is that that is a portion that the Treasury
chooses then to give to the EU. It has
been routed through the
Q20 Mr Caton: While we are talking about the European Union, the European Commission has said that it is prepared to take regional action in the absence of international agreement. What form do you see that action taking? How effective could it be?
Mr Lockley: I would imagine that would be a regional emissions trading scheme
so shipping would join the existing EU ETS much in the way that aviation has
done and then you would need some way in which to define the scope of the
emissions that you brought inside that emissions trading scheme. The obvious one is routes to European ports
but then we get back into the issue of evasion.
There are difficulties with doing any regional only schemes. You can have ships docking at
Caton: So what has been the
Mr Lockley: As far as I know they have supported the EU line that this is a fall back. We would rather see something global but if we do not get sufficient progress then yes, we would support regional action. However, I would check that with the UK Government.
Q22 Colin Challen: What real potential is there for further emissions reductions from improvements and technology in shipping and operational practices? I was reading the Chamber of Shipping's memo which rather suggested to me that they thought we had got to as good a place as we could with these things and there are problems in changing some of the operational practices. What do you think is the situation and what should the Government be doing to help develop emissions reductions from shipping?
Mr Lockley: There is potential around. For instance, simply by travelling slower ships can save up to 40 per cent of fuel on some of the routes. The reason they do not do that is to do with the structure of their contracts and the way port charges are worked out. I would speak to the industry in more detail about why exactly that happens, but if it were possible to change the incentive structure for ships in order that they crossed oceans at the optimum fuel speed then there are significant savings to be made just on that alone. Perhaps the most inspirational thing that happened during that quite difficult week at IMO was the presentation by a company called Sky-Sails who have a very high tech take on a very old idea which is sails for ships. They now produce very large power kites which run out in front of the ship and describe a figure of eight in order to maximise the pull on the ship. Although these have only been demonstrated on a couple of ships to date, they are quite promising as a piece of technology and in the optimum conditions they save up to 57 per cent of a ship's fuel. That is not going to be the case for every route and every wind direction, but clearly there are substantial savings there. I think while perhaps the status quo does have to change quite significantly, there are clearly substantial reductions available.
Q23 Colin Challen: It certainly sounds to me like the idea of developing world trade on the basis of sail is innovative and we ought to investigate that further. Does the Government have a role to play here because if we were saying to the shipping companies and their operators that things have to slow down, they have to save emissions by reducing speed and so on, that is going to affect the whole business culture of just in time. You cannot simply say to one sector that they must go slower when all the other sectors are saying they want things just in time because they are not prepared to pay for warehousing costs. We would just end up with warehouses on the oceans.
Mr Lockley: My understanding is that ships quite often do not do that. They will steam across the ocean and then wait two weeks in a port because there is a first come, first served basis in the port, whereas if that could be restructured they would be perfectly happy to spend that time on the high seas and still do a just in time delivery. I think there are instances when it is a case of hurry up and wait and they are rushing across the oceans just to wait to deliver their cargo.
Q24 Colin Challen: Will the IMO's proposed design index and operational index make much of a difference, do you think? How quickly would that difference occur if it did?
Mr Lockley: I cannot pretend that I understand the design index. It is a mathematical formula stretching across an entire page which was being designed by a committee of a hundred people at IMO. I occasionally raise my head and hear the words "wave co-efficient" and go back to my e-mails! I think that is something you would have to ask the technical experts within the shipping industry. However, my sense is that with a formula that complicated there would be a lot of possibility for gaming the system. That would be my concern.
Walley: I would like to turn to emissions
which are affecting air quality. I think
there is quite a lot of concern about the direct cause from shipping emissions
of something like 60,000 deaths a year, including 27,000 deaths in
Mr Lockley: The MARPOL VI agreements regulate sulphur emissions within special areas and in those areas ships will have to be emitting considerably less sulphur than they do in the current heavy fuel oil. There are two options, one that they switch to distilled fuel - essentially diesel - instead of burning very heavy fuel off the bottom of the refinery as they do at the moment; or they have SOx scrubbers on board. My understanding from talking to people in the shipping industry is that those SOx scrubbers are not really up to scratch yet, they are not robust enough to survive life at sea. I think there are problems about meeting those Annex VI obligations and already the other week we saw at the MEPC countries raising concerns and making first moves to dilute those because some of the cost estimates of what it would mean to actually meet them have started to come through and it is going to be very expensive. I am not saying it is going to happen, but there is concern that those regulations might be watered down which would be a great shame because they are very important in fighting that marine pollution. Directly in ports which is where there is the human health impact, ships are waiting in ports and running their engines in order to generate energy for functions on board, there are ways in which the ports authorities themselves could tackle that problem, for instance by providing onshore electricity, preferably renewable electricity, directly into the ships so that they did not have to run their engines. Our recommendation is that there could be legislation for that so that port dues would automatically cover that charge, so a ship would already have been charged for its shoreside electricity therefore it would not be saving anything by running its engines, whereas currently electricity is a charge on top and it is probably cheaper for the ship just to sit there chugging over its engine to generate electricity.
Q26 Joan Walley: Could I just check in respect of MARPOL VI, is that just about sulphur dioxide or is that about other emissions as well?
Mr Lockley: I think the latest amendments to MARPOL VI are specifically about sulphur dioxide. In the wider Annex VI there are other pollutants covered, although I would have to check that. I am happy to do that and get back to you.
Walley: Thank you. In the comments you have just made about
shoreside renewable generation, if that is not explicitly covered under this
latest amendment to the MARPOL convention, how could that be addressed by the
European Commission? Are you aware of
talks within the EC about trying to get across
Mr Lockley: I am not aware of any.
Clearly a European-wide approach would be preferable to simply doing it
Walley: My reason for asking was that we
have picked up from The Naval Architect
back in January that "the UK Government and industry leaders have appealed to
Mr Lockley: I was not aware of that; that is interesting. I will take that up.
Chairman: Thank you very much indeed; that was a very helpful session for us.
Memorandum submitted by Dr Andre Stochniol
Examination of Witness
Andre Stochniol, Founder, International Maritime Emission Reduction Scheme,
Q29 Chairman: Dr Stochniol, thank you for coming in; welcome to the Committee. As it is your first meeting with us I wonder if you would like to say a bit about your own personal background and how you came to be involved in the subject of tackling emissions from shipping.
Dr Stochniol: In early 2007 I developed a proposal for a hybrid scheme to reduce
CO2 emissions from shipping and that includes
mitigation and adaptation as has been mentioned before. The proposal was embraced by
Chairman: Thank you very much. Joan?
Walley: I think you sat in for our previous
witness session when we referred to the recent meeting of the IMO's Marine and
Environmental Policy Committee which was held in
Dr Stochniol: Thank you, that is a very interesting question. I am afraid market based instruments were
pushed aside, as has been highlighted by my previous speaker. There was chasm between the position of
developed countries and developing countries and the principles of why and how
to use these schemes. In effect market
based instruments were only introduced on Friday, on the last day of a week
long session. More proper discussion has
now been moved to the next MEPC meeting in July 2009. This will be too late for the Copenhagen
Protocol. The draft text for the
Copenhagen Protocol needs to be ready by June 2009, one month before the next
meeting. Basically the route through IMO
and MEPC regarding market based schemes is not viable for
Q31 Joan Walley: Can I just try to understand what you are saying in the sense that if there is no chance and nothing can be got ready for Copenhagen for the reasons you have just outlined, presumably you are saying that whatever then came about it would be too late to do anything. What would be the earliest time that you think something could be prepared by?
Dr Stochniol: We are talking about global.
If we talk about global, if global is not ready then
Q32 Chairman: That is quite a bleak assessment. You are saying that if we miss this chance it could be 15 years from now before any effective action is implemented. The previous witness said that emissions from shipping have doubled since 1990. If they continue to rise at that sort of rate they would then form quite a significant percentage of global emissions and would still be outside any kind of international framework to reduce them, so they are becoming quite a substantial proportion of the total at that time.
Dr Stochniol: The part that I was mentioning was referring to the market based scheme. Obviously there might be some mathematical formula regarding the operational index and design index that might have an impact, but we have had this report, the market based scheme, and ship owners might simply not see the need to buy an engine which is ten million dollars more expensive. Secondly, the design index will only take effect in a very long time because the life of a ship's engine is 30 years. So if someone is buying or ordering a ship now it will have an impact over a very long time.
Q33 Mr Caton: I think it would be useful at this stage if you could tell us a bit more about your proposal for an International Maritime Emissions Reduction Scheme. Can you briefly outline its key principles?
Dr Stochniol: Let me focus on what I believe can unlock the principle, what can
really unlock the multilateral deadlock.
As I mentioned,
Q34 Mr Caton: It sounds, on the face of it, that you have resolved this impasse between the Annex 1 and the non-Annex 1 countries but, from what you say, the delegations - certainly the delegations from Annex 1 - were not open to that idea at this stage. Is that the case?
Dr Stochniol: It is not that the delegations were not open, the delegations are very often messengers of people who are coming with a decision and they have to stick with what the government has decided already. I have been working with these representatives for the last two years, so in individual private conversations many people have said that this can actually work. Secondly, just to validate that, there were plenty of experts so we convened a group of experts and out of the group of expert discussions everyone is saying that it could work. We would not get the evasion problems with the route based schemes or anything like that. We asked the head of the working group who has spent decades of work on this whether that proposal had ever been raised. He said it has not been raised in such a way.
Q35 Mr Caton: What about the shipping industry and the port authorities? Clearly you have spoken to them, what is their response to this approach?
Dr Stochniol: They would be happy to have a global approach. Just three days ago the ship owners from
Q36 Mr Caton: Your scheme is on the table. Are there any other viable schemes on the table?
Dr Stochniol: The scheme that I have just described started with the proposal of
Q37 Jo Swinson: Assuming that this scheme or a similar scheme were actually implemented, what actions would you expect the ship owners to take and what would you expect the shipping industry to actually do to reduce the emissions?
Dr Stochniol: I think it is basically changing behaviour; it is incentives to implement the things that are already available like more efficient engines and of course future changes are very important. I would probably categorise it in four elements. One is the behaviour short term and really because the viability of the costs and especially the cargo costs would make the use of operational efficiency measures more attractive. Secondly, because we start collecting data, we will see transparency and comparability between the ships and some companies are already asking, "Can I know how efficient your ship is?" Therefore suddenly if we have the data we can compare their efficiency. So that is the behaviour. The second part is technology short term. Part of the scheme is funding for technology transfer because it is not a good point just to change the technology in one of the part of the world. That would be wider acceptance of the clean technologies. Finally, in several places in the world there are bottlenecks and no-one wants to fund it because it is common good, for example Malacca Straights. So with additional funding you can reduce congestion and implement electronic highway in Malacca Straights. Long term is a completely different story but even more important because the emissions are related to economic activity. So, first of all, more efficient engines will be ordered. I mentioned, for example, a ten million dollar engine. It is available now but it is not being bought because there is no case. There is no creditability regarding the cost of carbon for the next 20 years. They cannot make their business case to actually buy it. So that is very important. Regarding technology long term there would be additional investment in research and design and therefore the step changes like hydrogen in transport can come forward and with this you really save a lot of emissions and that is what everyone is asking for.
Q38 Jo Swinson: The charges you are proposing are about five per cent added onto shipping fuel costs. Is that going to be enough to get some of those big decisions changed, whether it is spending ten million dollars extra on a different type of engine for example or replacing part of the fleet? As you say, these are decisions that maybe only get made once every 30 years. Is that going to be enough of an incentive to change those kinds of decisions?
Dr Stochniol: I believe yes. I have been working in consulting as a manager and some of our programmes have been stretching for 50 years. In that case you are not looking at the cost of today, you are looking at the total cost of that and therefore I am absolutely certain that even that small charge would really change the business case into a favour of buying a more efficient engine.
Q39 Jo Swinson: Are there any other barriers that you would see to the shipping industry taking action that would need to be overcome?
Dr Stochniol: It is political. Most of the shipping industry is saying, "As long as it is global and it does not change the competitive landscape we are happy with that". As I mentioned even recently the French ship owners use the forbidden word "tax" but they would accept a tax.
Q40 Joan Walley: Just going back to your scheme, how quickly do you think it could come in and, if it were to come in, will it be done as an annex to an existing convention or would it be a brand new convention? If so, would that not take a huge amount of time in terms of negotiation?
Dr Stochniol: Absolutely. There are two
answers here. One of course is the
technical feasibility. From a technical
point and also taking into account the climate change negotiations this scheme
could start as soon as 2012 or 2013.
There are no technical difficulties for such a rapid start. The necessary data is available and some of
the emissions based design we do not have to worry about because this scheme
does not require detailed data. For
instance, I will give you some examples, the fuel receipts are available so
every single ship has to have the fuel receipts for three years. If they buy fuel for 500,000 dollars they
have to keep the receipt for three years.
The receipts are also kept by suppliers therefore it is a very good
tracking and foolproof method of doing that.
Enforcement would only be done in Annex 1 countries therefore it is
relatively easy to implement. Legally we
already have a law that is dealing with international obligations and on the
dominance of international law over domestic.
This is the law of the sea. All
of the delegations, including
Q41 Joan Walley: We are almost across the River from the IMO and I think what you are saying really begs the question of where the IMO fits in relation to the international architecture about how these issues have been dealt with. Presumably the leadership would come from the IMO.
Dr Stochniol: The IMO is a multi-lateral organisation that really depends on the government and the representatives of the government to make any decisions. When we talk about IMO we have to understand that there is a secretariat and people who are facilitators and there are 150 or so governments that are part of that. Therefore they work together. If the government is not bringing anything on the table you cannot talk about it. Therefore the key issue here is that the CO2 emissions are part of a climate change and who decides on the priority, it depends who you talk to. In some of the nations they would say that it is the IMO that has to decide irrespective of what UNFCCC - the climate change people - say. In the UNFCCC they say that it is their priority to decide what happens to greenhouses and CO2 emissions and what they agree on the convention here is absolutely applicable everywhere. Therefore what you have is two kinds of languages in a way. One language of the people from maritime, one language of the people from climate change. They speak English but not the same language in the sense that they understand each other and that is a big problem that you have to reconcile on an international level, a verified political level, that it is a global issue and we should not try to see it as a compartment of only maritime or only CO2 in climate change. It cuts across.
Q42 Joan Walley: Finally on that, do you have any suggestions as to what role the UK could take if it is playing a leading role in all of this to, if you like, give the IMO the language of environmental sustainability?
Dr Stochniol: What happens in the next few weeks or few months is really
essential. In my humble view the UK
Government and perhaps even this Committee has a big diplomatic economic
opportunity. I spent two years which has
been a rollercoaster because several times I thought we were getting into a
deal. Let me give you an example of some
of the issues from my experience and then I will come back to the
solution. The issues are very often the
opportunity. Quote number one, "We have
only two hours a week for this topic".
That quote comes from a small team working in a major maritime nation on
maritime and climate change; two hours per week on such an important
topic. Quote number two: I spoke to many
countries who said, "Why us? Why not
come to X, Y, Z?" Basically because it
is a global problem, a complex problem, everyone is free-riding, waiting for
someone else to take a leading role despite the high promises or occasional
rhetoric. Quote number three: "It seems
like a great proposal but it may be incompatible with our policy". "What is your policy?" The answer, "We do not have one yet". Some of the quotes are coming from a
Q43 Joan Walley: Sorry, I did not get that.
Dr Stochniol: A senior leader, a senior official or minister; a leader. This person will own the opportunity and can
therefore have the time, energy and remit to drive it forward. Step number two: bring the global but
differentiated principle or approach to the climate change talks in
Q44 Mr Chaytor: You suggest that about ten billion dollars could be raised through your kind of carbon charging scheme. What are the assumptions underlying that and how have you calculated the ten billion dollars?
Dr Stochniol: First of all these ten billion dollars are coming assuming there is
a global uniform. If we just constrain
it to Annex 1 countries we will come to six billion (60 per cent) and that is
the latest view. The assumptions are
based on the emission growth that is currently happening and the target that we
will put on the shipping so I assume that the global community could agree to
20 per cent of reduction of emissions of CO2 by 2020. So the gap is
driving the demand for emissions and the carbon price drives the charge. Basically in 2012 the charge may be around
five per cent of the fuel but by the way translates only to 01 per cent on the
end customer. Myself, when I import that
Q45 Mr Chaytor: What mechanism are you proposing for collecting the charge? Who would be responsible?
Dr Stochniol: Shipping is complex. So far
no-one has designed an emissions trading scheme. There are multiple parties who can pay for
the fuel so what we say is that it is the party that pays for the fuel to
develop a charter. It might be the shop
owner; it might be the ship manager. The
one who pays for the fuel pays the emission charge. In a year we know that that ship has spent
100,000 tons of fuel, for example; we know the percentage of goods delivered to
the Annex 1 countries; we know the price and the charge. It may be paid directly to the central
account bypassing the national coffers.
Basically what is very important in this scheme is that it is a
super-national to avoid the domestic revenue problem. If we collect it nationally then we have a
problem like we had in the
Q46 Mr Chaytor: Who would be the members of the fund? How would the fund be established?
Dr Stochniol: It would be a super-national organisation like IOPC which is a super-national organisation that has a remit to deal with that and has a formula - that is very important - that tells you how the charge is being calculated. Otherwise you cannot implement an international charge unless it is transparent.
Q47 Mr Chaytor: In terms of the distribution of the fund, how would that money then be used? Would there be a formula for that?
Dr Stochniol: Let me give you the example of the six billion dollars. Let us say that six billion dollars are coming to the fund based on the target of emissions. Nearly half of that would go to reducing emissions by purchasing forestry credit or CDM credit by reducing emissions as well. So it is 2.5 billion dollars for that. Then 2.5 billion dollars is proposed to go to the adaptation fund under the UNFCCC. That is therefore adaptation climate change. The remainder, about one billion dollars, would go to the technology fund that is looking for technology transfer and long term technology transformation. Importantly the money that is going to adaptation, we can buy forestry credit, we can by credit on primary markets which is 40 per cent cheaper than on a secondary market.
Q48 Mr Caton: Would this super-national body that you mentioned be responsible for setting the emissions cap for shipping and also determining the carbon price?
Dr Stochniol: This is the kind of execution body, so the cap is really under the
convention for climate change. In
Q49 Chairman: How easy would it be to audit independently the emissions figures from individual ships?
Dr Stochniol: It is already legal and obligatory. Every single ship or 99 per cent of the ships world wide, every merchant ship, is required to keep the receipt of fuel for three years at any time on board. The emissions are directly proportional to the fuel; we know that one hundred per cent. If we do it globally for Annex 1 countries you can always enforce it in the port, it is under so-called Port State Control which is a way to enforce the safety of ships and fulfilment of bilateral obligations. The liability will stay with the ship. It is not the charterer of the ship this month or the charterer of the ship month, it is the ship. If a ship comes to the port and the information is not available on the central data base or emissions have not been paid for the last three months or whatever, it is not allowed to come in until it settles the charges. It is a hundred per cent auditable by the authorities legal instrument under MARPOL Annex VI which is the Bunker Delivery Note, the till receipt.
Q50 Chairman: So it is robust against fraud.
Dr Stochniol: That is correct. There was
an example given by Peter Lockley from WWF about this. The ship can go on a route-base but can go
Q51 Chairman: You have suggested that the British Government have not been very active in pushing agreements on greenhouse gases within the IMO. Which countries have been more active in doing that?
Dr Stochniol: The reason I suggested that it has not been active was because I
was initially asked to contact the UK Government by the secretariat of IMO and
other people who knew the process. They
said that the
Q52 Chairman: Are you not able to say why you think
Dr Stochniol: Can you repeat the question, please?
Q53 Chairman: You have identified some other countries that are now being more
energetic in pursuing this agenda but
Dr Stochniol: I think it would be a question of ownership, the one that I have
suggested in my recommendation. Around
2007, at the beginning of the year, the issue of CO2 emissions had been very much politicised. In the past it was the maritime coastal
organisations that always had a lead on all technical issues. Suddenly Defra came into the equation and there
was a question of coordination and agreement of the position. What happens now is that we are coming to
these two different languages, maritime and climate change. There is the question of who is to
decide. All of the countries in
Chairman: Thank you very much for your time for coming this morning. It has been a very interesting session from our point of view.