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Climate justice and the decarbonization of shipping

Dr Wassim Dbouk explores the issues around the decarbonization of the shipping industry, where market-based measures are a hotly debated topic.

This article is part of the ISC’s Transform21 series, which features resources from our network of scientists and change-makers to help inform the urgent transformations needed to achieve climate and biodiversity goals.

The Intergovernmental Panel on Climate Change (IPCC)’s recently published Sixth Assessment Report, Climate Change 2021: The Physical Science Basis, used improved used improved climate modelling to predict future scenarios based on varying degrees of greenhouse gas (GHG) emission reductions. Worryingly, the report found that the world is likely to temporarily reach 1.5°C of warming by 2040 even in a best-case scenario of deep cuts in GHG emissions. In doing so, it highlighted once more the scale of the challenge and the investment needed to achieve the “rapid and far-reaching transitions in energy, land, urban and infrastructure (including transport and buildings) and industrial systems”, which it had called for in a special report in 2018.

Since the Industrial Revolution in the 1800s, humans have relied heavily on burning fossil fuels to generate energy, resulting in the release of growing volumes of GHG into the atmosphere, and consequently changing our climate. Shipping has been no exception to this process, as many vessels converted from coal to fuel oil to generate power for their propulsion systems as early as in the 1870s. Nearly 150 years later, shipping is responsible for 2.89% of global GHG emissions. Nevertheless, while considerable effort is being made to decarbonize key emitting sectors (e.g., housing, aviation, road transport) in response to the IPCC findings and in line with Paris Agreement pledges, shipping is lagging behind.

Given the industry’s global nature and its wide range of stakeholders, neither decision-making around the adoption of decarbonization measures nor concerns about their potential impacts is exclusive to one group of States. These matters are deliberated during the scheduled sessions of the International Maritime Organization’s (IMO) Marine Environment Protection Committee (MEPC). The latter developed its initial Greenhouse Gas reduction Strategy (GHG Strategy) in 2018, which set the below-par target of reducing total annual GHG emissions by “at least 50%” by 2050 compared to 2008, and laid out a non-exhaustive list of short-term, mid-term and long-term measures to be considered by the MEPC.

In its most recent 76th session in June 2021, little progress was made by the MEPC. While it agreed on expanding the scope of existing technical and operational measures to improve the energy efficiency of ships, the debate around the adoption of mid-term market-based measures (Market Based Measures (MBM) such as a carbon levy or an emissions trading system) was deferred to the MEPC’s next session in November. MBMs are a crucial part of the IMO’s GHG Strategy, as they are widely seen as the most effective means to make alternative clean fuels for shipping competitive with fossil fuels, and incentivize a shift away from the latter. However, there is much less consensus around how such measures should be designed and operationalized, taking account of the different circumstances of groups of States.

This falls within a complex political landscape where, apart from their evident relation to climate action, decarbonization efforts are perceived by developed States as a component in the “race” to achieving net-zero, while developing States are more concerned about potential impacts on their socio-economic development objectives. To illustrate, developed States’ national decarbonization policies place an emphasis on R&D to develop and reduce costs for producing clean fuels – building infrastructure that would ultimately contribute to growing their economies through creating new jobs and gaining a competitive advantage in future energy markets.

The deliberations during MEPC 76 highlighted serious trust issues and concerns between developed and developing States around the unequal potential impact of introducing even the relatively less problematic short-term measures which were ultimately expanded (energy efficiency requirements in their initial scope were adopted in 2011, entered into force in 2013, and were supplemented in 2016 by a requirement for ships of 5,000+ gross tonnage to collect consumption data for the fuel oils they use).

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Rethinking Energy Solutions

Three areas were identified for immediate action. All three are designed to address the drivers of demand and consumption through measures like remote working, digitalization, and the reshaping of urban spaces and their use; maximizing sustainable energy independence at local and individual levels through, for instance, decentralized renewable energy solutions and efficiency enhancing measures; and influencing behaviour towards responsible consumption such as encouraging new trends in mobility, less material consumption, and sharing vs. ownership models..

Evidently, cognizant of the challenge of ensuring that climate mitigating measures would be diplomatically viable, the GHG Strategy had provided that their impacts “should be assessed and considered as appropriate before adoption of the measure[s]” and added that “particular attention should be paid to the needs of developing countries, especially Small Island Developing States (SIDS) and least developed countries (LDCs)”. Moreover, the MEPC laid out in its 74th session (May 2019) a four-step procedure for assessing their impacts on States, including a requirement for the conduction of an initial impact assessment to be submitted as part of the initial proposal to the Committee for candidate measures.

Accordingly, several impact assessments had been conducted when short-term measures around ship energy efficiency were put forward. However, lack of accurate data and the need to rely on many variables to evaluate impact led the United Nations Conference on Trade and Development (UNCTAD) to conclude that these assessments were inaccurate. A comprehensive impact assessment of the measures was thus required by the MEPC, which found that their impact on maritime logistics costs, trade flows and global Gross Domestic Product (GDP) could be considered small as compared to usual market variability of freight rates and disruptions caused by other factors (e.g., climate change, pandemics).

Importantly, it also decided not to include any findings regarding the potentially disproportionate negative impacts of the measures on States, “including developing countries, in particular on [Least Developed Countries] LDCs and [Small Island Developing States] SIDS” due to “lack of a proper and up-to-date set of data and pertinent studies specifically focused on SIDS and LDCs”. Considering such uncertainties, the MEPC adopted the measures while agreeing to keep under review their potential impacts on the most vulnerable States in order to make adjustments where necessary.

The discussion around MBMs picked-up pace as several submissions to the MEPC were made by Member States. Most notably, a concrete proposal for a GHG levy has been put forward by the Governments of the Marshall Islands and the Solomon Islands to establish a universal mandatory greenhouse gas levy for international shipping. The proposal attempts to attribute special consideration to the circumstances of LDCs, SIDS and developing States, proposing an inclusion of a “feebate” mechanism which would direct part of the revenues generated by the levy to support financing climate change mitigation measures.

Nevertheless, it still received strong opposition from developing States based on its disregard of the principle of “common but differentiated responsibility and respective capabilities”. Broadly speaking, the latter principle aims to nuance the efforts from States with varying national circumstances to solve environmental problems of a global nature and entails that this is done based on two criteria: responsibility (for causing the environmental problem – both historical and present) and capability (to tackle the problem – both financial and technical). The challenge at hand stems from the fact that, on the one hand, and as recognized by the MEPC, “countries that are affected the most by climate change impacts, in particular economies in SIDS and LDCs, are already facing high shipping and trade costs with their trade depending almost exclusively on maritime transport to access regional and global markets”; and, on the other, the introduction of a greenhouse gas levy for international shipping will more likely lead to an increase of transport costs and import prices for SIDS, LDCs and developed States, compared to the rest of the world. Given that the proposed “feebate” system aims to raise the capability of vulnerable States to overcome the negative consequences of climate change, rather than to address the direct impacts of the adoption of the MBM in question (namely, compensating for increases of import prices and transport costs relative to the rest of the world), the greater risk which they would create vis-à-vis these States would not be adequately offset and a consensus on the topic would remain unlikely.  

This lingering political deadlock at the IMO’s MEPC is inextricably tied to the concept of climate justice which recognizes that the impacts of climate change will not be felt equally or fairly between populations in different countries (rich/poor; young/old; male/female; etc.) and calls to place the most vulnerable communities at the heart of climate change policy. It demonstrates that the impacts of climate change that need to be considered when framing such policies must also include those resulting from measures proposed to abate it.

As the divide between the Global North and the Global South continues to grow and markets and economies reshuffle due to changing global circumstances (pandemics; cascading crises brought on from climate change.), concepts of fairness and justice are becoming increasingly crucial for the success of diplomatic efforts to adopt measures to abate climate change while simultaneously ensuring that no one is left behind as we achieve sustainable development.

Dr Wassim Dbouk is a marine and maritime policy research fellow at the Southampton Marine and Maritime Institute, University of Southampton. Wassim is also a member of the Commonwealth Futures Climate Research Cohort established by The Association of Commonwealth Universities and the British Council to support 26 rising-star researchers to bring local knowledge to a global stage in the lead-up to COP26.

Image by Chris Pagan on Unsplash

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