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Shipping is aggressively reducing C02 emissions, but will this be enough to satisfy governments?

About 90% of world trade is carried by shipping, which is already the most energy efficient mode of commercial transport.  Improving efficiency and reducing CO2 emissions is enlightened self-interest, given that fuel is by far a shipowner’s greatest cost (despite the fall in oil prices since 2014).

International Maritime Organization (IMO) data show that shipping has reduced total CO2 emissions by more 10% between 2007 and 2012 as a result of aggressive fuel efficiency measures.  The share of the world economy’s CO2 emissions from international shipping was just 2.2% in 2012 compared to 2.8% in 2007.

However, because of the industry’s enormous size, there is massive political pressure for shipping to deliver more.

Mandatory IMO regulations already implemented globally will ensure that all ships built after 2025 will be at least 30% more efficient than most ships operating today.  Combined with further technical and operational measures, the sector should be able to reduce CO2 per tonne-kilometre by at least 50% before 2050.

These further CO2 reductions will be real, achieved without the smoke and mirrors of offsets.  The industry will have bigger ships, better engines, cleaner fuels and smarter speed management.  Moreover, the mandatory worldwide use by ships of low sulphur fuel from 2020 will coincidently greatly increase fuel costs, a further incentive to improving fuel efficiency.

In October this year, in response to the Paris Agreement, IMO Member States agreed to develop a comprehensive Road Map to build on the substantial CO2 reductions that are already being delivered by the sector.  The hope of ICS is that as part of this strategy, initial CO2 reduction objectives can be adopted by IMO for the sector by 2018.

Nevertheless, given the industry’s current dependence on fossil fuels, there is a limit to the further fuel efficiencies that can probably be achieved with current technology.  Projections for future trade growth – even if adjusted downwards to take account of structural changes in the relationship between global GDP increases and demand for maritime transport – suggest that technical and operational measures alone will be unlikely to be sufficient to deliver absolute cuts in the shipping sector’s total CO2 for several more decades.

Shipping is a servant of the world economy and has no control over demand for its services, on which sustainable development and the improvement of global living standards depend.  About 60% of maritime transport now serves developing economies.

Until radical low carbon fuels that we cannot yet anticipate become available, the best the industry can reasonably be expected to achieve in the short and medium term is probably something similar to carbon neutral growth. This can then be followed by far more dramatic reductions once new technology and ultra-low carbon fuels become available.

However, it remains to be seen if is this is a message that governments will be willing to accept, without the imposition of a Market Based Measure. In which case, the clear preference of the shipping industry will be for a global fuel levy based on bunker consumption.


About Simon Bennett

Simon Bennett, Director policy & external relations, International Chamber of Shipping (ICS) has worked for ICS for over 20 years, representing the shipping industry with the various intergovernmental bodies that impact upon the shipping industry.  He lives in east London and is a graduate of Oxford University.

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