Memorandum submitted by The Chamber of
Shipping
The Chamber of Shipping is the trade association
for the UK shipping industry, working to promote and protect the
interests of its members both nationally and internationally.
With 140 members and associate members, the Chamber represents
over 860 ships of about 23 million gross tonnes and is recognised
as the voice of the UK shipping industry.
SUMMARY
1. In the climate change debate shipping should
be regarded as the best available solution to the global need
for transportation. Shipping is the most energy-efficient mode
of transport and the backbone of global trade. Seen in light of
the enormous volume of goods carried by ships, the CO2 emissions
from shipping is small. The reason for this is that shipping for
many decades (even without regulation) has had a strong market-driven
incentive to focus on reduction of fuel consumption. However,
the Chamber of Shipping fully acknowledges the need for further
reduction of air emissions from shipping and believes the way
to achieve environmental protection must be found in a holistic
manner. To be successful, such an approach should take into consideration
the availability of technology to reduce emissions, the need to
encourage innovation and the economics of world trade.
2. The recent revision of Annex VI of the International
Maritime Organization's International Convention for the Prevention
of Pollution from Ships (MARPOL), delivers an exceptionally ambitious
programme for the reduction of emissions to air, of what may be
termed `classical pollutants'. It must be remembered that agreements
to reduce pollutants such as sulphur oxide (SOx) and nitrogen
oxide (NOx) may have a negative effect on the simultaneous efforts
to reduce CO2 emissions. This may arise either from technical
"trade-offs" in engine efficiency, or from the significant
additional costs of cleaner fuels, which may lead to a modal shift
to other less carbon-friendly transport modes. Net environmental
benefit for the long term must therefore be the objective of any
future government policy.
How significant is global shipping's contribution
to climate change? How is this projected to change in the future?
3. Precise figures concerning the contribution
of international shipping to global carbon emissions are hard
to come by. A variety of studies put the figure at anywhere between
1.5 and 5%. The IMO and most scientific commentators agree that
a figure in the range 2-4% is realistic. While a precise figure
would be helpful for measurement purposes, it is not necessary
to wait for this before taking policy decisions. This is for two
reasons; firstly, even at the higher end of the estimates of shipping's
contribution to carbon emissions, when seen in the context of
the enormous amount of work performed, shipping remains by far
the most efficient way to move bulk cargoes of goods and this
position is unlikely to be usurped in the medium term. Secondly,
despite its excellent carbon performance, the shipping industry
is absolutely committed to reducing its carbon footprint, in line
with society's expectations.
4. Looking at future trends, it is likely that,
in absolute terms, emissions from shipping will grow steadily
for the foreseeable future despite efforts to improve the carbon
performance of individual ships. This is because shipping is a
service industry, which responds directly to growth in world trade
(without which expansion in the world economy could not occur)
and that growth is likely to be greater than the achievable carbon
reductions. It is worthy of note that no serious politician or
government body has ever called for shipping's carbon emissions
to be reduced at the expense of slowing down the world economy.
Any reductions in ships' carbon emissions must therefore be achieved
in a way that permits growth in the volume of goods shipped by
sea.
How should the UK's share of international maritime
emissions be measured and included in UK carbon budgets? How fast
could this be done?
5. Measuring the UK's share of international
maritime emissions is extremely difficult, with almost all of
the options failing to provide an accurate representation. Do
we, for instance, wish to measure the relative contribution of
the UK shipping industry (however defined) to that of the global
shipping industry? Or do we wish to measure the amount of carbon
generated by shipping in order to provide the UK with the goods
and services required? Or should the UK accept responsibility
for all carbon emitted by ships within its territorial waters?
When considering the most appropriate methodology for allocating
the share of global shipping emissions to the UK's Carbon Budgets,
it should be remembered that shipping is the only truly international
industry. Not only will ships make multiple calls in any one voyage,
but they will often carry cargo destined for onward transport
to a number of other countries. This makes allocating emissions
extremely difficult and carries with it the distinct possibility
of introducing error into the UK's overall Carbon Budgets.
6. When considering questions of measurement,
the other side of the coin, enforcement, must also be borne in
mind. The UK Climate Change Bill, the Kyoto agreement and the
EU Emissions Trading Scheme have all excluded shipping for the
same reason; it is virtually impossible to legislate for such
a mobile and international industry, except at the global level.
For any country to impose unilateral legislation on a global marketplace
is to deliberately impose additional costs on its own stakeholders,
which will not be shared by their competitors.
7. It is unclear to the Chamber what mechanisms
for the enforcement of any national measures will not be capable
of being easily and legitimately avoided by operators. This means
that the total emissions reductions will, in practice, be less
and may paradoxically be even higher; if legitimate avoidance
measures result in longer voyages. For instance, if the UK were
to impose a carbon charge on a ship's final voyage into the UK,
a ship coming from China may decide to make an otherwise unnecessary
call in France or Ireland in order to minimise the technical `final
voyage' into the UK.
8. If the Government were clear that it only
wished to measure the UK's contribution; a position that
the Chamber of Shipping could support; to international shipping
emissions, this could be done as soon as an agreed methodology
was decided upon. A "bottom-up" approach (ie obtaining
data from individual ships) would yield more accurate data than
a "top-down" (eg averages of bunker fuel sales etc)
approach, but it should be recognised that this would place a
considerable burden on both shipowners and administrations.
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? How well is
the UK Government playing a role in developing such agreements?
9. Measurement and control mechanisms for carbon
are being actively discussed within the International Maritime
Organization (IMO). Its Secretary General has announced his wish
for the body to have agreed upon a concrete package of proposals
in readiness for the UNFCCC Conference of the Parties (COP15)
meeting in Copenhagen in 2009. Meanwhile the EU have indicated
that, should IMO not deliver a satisfactory package of measures
by that date, they will then look to include international shipping
within the EU ETS by 2012. It is therefore clear that shipping
will be included within some form of international/regional regime
within a very few years.
10. The UK Government has played an active and
constructive role in the negotiations at IMO and its policy position
reflects well the realities of dealing with this particular sector.
The Chamber of Shipping is keen that the UK Government should
remain committed to an international solution delivered through
the IMO. While we accept that measures delivered either regionally
or unilaterally will always be an option open to governments,
we would stress that these, especially the latter, should be seen
as options of last resort, both in terms of effectiveness and
ease of administering. To that end we would consider the inclusion
of international shipping in the UK Climate Change Bill (while
negotiations are building to a climax in the international arena)
to be a retrograde step, and one likely to hinder rather than
help the broader discussions.
11. Emissions trading and market-based instruments
(MBIs) are politically very sensitive topics within the IMO. A
significant number of developing, non-annex 1 countries are of
the opinion that they are not duty bound to seek carbon emission
reduction measures through the IMO. While they are not unwilling
to discuss measures to improve operational and technical efficiency,
they are extremely unwilling to contemplate the introduction of
MBIs. The Chamber of Shipping recognises that MBIs must play a
part in efforts to reduce the sector's carbon footprint. it is
actively working with its international parent body; the International
Chamber of Shipping (ICS); and sister associations throughout
the world, to develop an approach that takes account of these
concerns, while maintaining the necessary level playing field,
ensuring that any solution does not discriminate between national
shipping registers.
What are the prospects for developing new engine
technologies and fuels, as well as more fuel-efficient operations?
What more could the Government do to assist these developments?
12. Shipping is a mature technology and the
scope for improvement by full application of existing technologies
is limited. Ships engines have improved steadily since their inception,
while hull and propeller designs are almost fully optimised. New
hull coatings may provide significant savings in the order of
5%-10%. While there is always room for improvement (and much is
dependent on what constitutes an `existing' ship), it is thought
that a modern, well-maintained vessel may be able to improve its
performance by about 5%, if cost/benefit is considered immaterial.
Given that fuel costs account for 30-50% of total voyage costs,
it should be recognised that shipowners have long had every possible
commercial incentive to optimise fuel efficiency.
13. New technologies will certainly come on
stream in time. But they are not available now, and, no matter
how many prototypes or concepts are developed, owners cannot be
expected to invest in anything other than robust, proven technologies
that are commercially available. However, owners are keen to see
new technologies emerge and are willing to offer ships to assist
in trials and development processes. Again it should be stressed
that, given the direct link between fuel efficiency and carbon
emissions, shipowners also have a direct commercial interest in
the development of fuel saving technologies.
14. Alternative fuel sources may also have a
role to play and bio-fuels can be used in ships engines. However,
given the volume of fuel used by the shipping industry and the
current uncertainty surrounding the net benefit of bio-fuels,
the industry would consider it prudent for legislators to better
assess the impact of a substantial take-up of bio-fuels by such
a large consumer as international shipping before reaching any
decisions.
15. Fuel cells, solar-power, wind kites etc
are all theoretically possible alternative technologies, but they
are best viewed as supplementary power sources rather than alternatives
to the main propulsion systems on board. Nuclear power is technically
feasible for ships and there are examples of nuclear-powered merchant
as well as military ships. Issues of security and acceptability
are, of course, dominant in that particular debate.
16. Reducing the speeds at which ships travel
is often seen as a "quick win" in terms of reducing
carbon emissions from ships. While it is true that reducing ships'
speed has a dramatic effect on fuel consumption, the full range
of underlying factors which have hitherto determined the speed
at which ships generally travel remain relevant. It should be
noted that shipowners/operators have relatively little say over
the speed of their vessels as this is invariably determined by
the charterer. Any reduction in ships' speed would therefore require
the consent of major customers, as they would in general have
to wait longer to receive their goods. Shippers seek to maintain
supply continuity and time of delivery is an essential competitive
parameter. To maintain an acceptable service at slower speeds
would mean an increase in the number of ships required; negating
much of the fuel savings otherwise expected. Furthermore, very
little can be achieved on traditional slow-steaming bulk carriers.
For ferries, travelling time for the passenger is a key issue
in the extensive competition with other (less carbon efficient)
transport modes; they should also be considered as a bridge between
areas forming essential and reliable infrastructure. Any policy
decision requiring vessels to slow down would need to be underpinned
by a robust and detailed analysis of all the implications of such
a measure.
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?
17. The need to improve the emissions or air
pollutants from ships has long been recognised. Indeed, no sooner
had the IMO's MARPOL Convention Annex VI entered into force than
efforts were made to revise it. The revised Annex VI is an ambitious
and far-reaching set of proposals which represent a major stretch
target for both the shipping and refining industries.
18. The revision process is almost complete
with the IMO's Marine Environment Protection Committee (MEPC)
58th session set to agree a draft text at its meeting next month.
This draft text, already universally accepted at MEPC 57, is almost
certain to be adopted unchanged and will enter into force by spring
2010. It is considered to be virtually impossible for either the
shipping or refining industries to meet more exacting standards.
The UK Government played a key role in reaching this agreement
and, as a signatory to MARPOL Annex VI, will be bound by the changes.
In the Chamber's opinion, further efforts by the UK government
to address the issue of air pollution from ships should now be
focused on ensuring that the review of the EU Sulphur Content
of Liquid Fuels Directive mirrors the text of the Annex VI in
terms of reduction levels, implementation dates and areas of application.
19. As noted at the top of this paper, care
must be taken to ensure a holistic approach. An unwelcome consequence
of the provisions of Annex VI for shipping in northern Europe
will be an effective doubling of bunker fuel prices from 2015.
It is our concern that this will lead to "modal back-shift",
ie a decrease in the amount of intra-European sea-transport and
a corresponding rise in the use of road transport. Should this
occur it will clearly have a detrimental impact on overall carbon
emissions. We would therefore urge the UK Government to work with
its European colleagues to develop a policy that implements the
revised MARPOL Annex VI, but seeks to minimise any subsequent
modal shift caused by the introduction of those provisions.
ADDITIONAL INDUSTRY
COMMENTS
20. The shipping industry has been working through
the IMO, EU and national governments on how best to reduce carbon
emissions for some time. As a result, it may be helpful for the
Committee to note the broad principles which we feel will deliver
a mechanism that delivers its environmental objectives, while
maintaining the competitiveness of the industry.
21. Firstly, and perhaps obviously, industry
is only interested in delivering a solution that is effective
in contributing to the reduction of total global greenhouse gas
emissions.
22. In order to achieve this and avoid evasion,
such a system must be binding and equally applicable to all Flag
States.
23. Across all maritime legislation, the shipping
industry consistently argues for a goal-based (as opposed to a
prescriptive) approach, as being better suited to such a diverse
industry and also allowing ship owners the flexibility to meet
their environmental responsibilities in the most cost-effective
manner.
24. Linked to cost-effectiveness are considerations
that seek to limit or at least minimise competitive distortion,
and that, within the parameters of sustainable development, do
not penalise trade and growth nationally or globally.
25. It has been suggested that shipping suffers
from the lack of a Formula 1 to lead and drive technological improvements.
Whereas the aviation industry has benefited from the civilian
application of military technologies and also from the space-race,
shipping has had no such high-end sector motivated by a completely
independent set of cost considerations. We would therefore suggest
that any control measures for shipping should actively support
and encourage the promotion and facilitation of technical innovation
and R&D in the entire shipping sector.
26. In addition, it is clear that any regulatory
mechanisms adopted must be flexible in order to accommodate likely
future technologies in the field of energy efficiency.
27. Finally in our checklist, the industry would
look to ensure that the "back-office" side of any regulation
is given due thought. For any system to be workable, and for true
environmental benefit to be gained, it is clear that the approach
must be practical, transparent, fraud-free and easy to administer.
DOMESTIC SHIPPING
28. We note that the subject of this inquiry
is the possible inclusion of international shipping emissions
within the UK Carbon Budgets. However, the Chamber has concerns
that emissions from domestic shipping (which can take place as
part of an international voyage) should be properly attributed.
We are unclear how this will be done. For example, it is not clear
how foreign-owned competitors, which have had the opportunity
to refuel abroad before making UK domestic voyages, will be treated?
We would ask the Committee to satisfy itself that the methodology
for including domestic shipping (and its definition) within the
Climate Change Bill are likely to achieve the stated objectives.
15 September 2008
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