Maritime emissions IMO discussions
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1 Shipping and Aviation Emissions Consequences for Shippers Contents: Aviation CO2 emissions Latest on ICAO negotiations Likely impact on shippers Maritime emissions IMO discussions CO2 possible global fuel levy Sulphur potential trade impacts
2 Aviation CO2 emissions - introduction GSF is closely following the negotiations at the International Civil Aviation Organization (ICAO) to reduce aviation carbon emissions. Following the omission of aviation from the Paris Agreement, the sector is under more pressure than ever to conclude a deal New GSF briefing note on aviation summarises the key issues
3 ICAO approach - summary ICAO has set a global aspirational goal of improving fuel efficiency by two per cent annually and stabilising carbon emissions at 2020 level - carbon neutral growth ICAO has a comprehensive strategy to progress technology, operations and alternative fuels to reduce emissions: CO2 standards for new aircraft were agreed in The standard will set limits in relation to size and weight, and ensure fuel efficient technologies are integrated into aircraft design and development. ICAO is promoting its Global Air Navigation Plan which it says can shorten flying times and therefore reduce CO2 ICAO is also encouraging R&D and trials of biofuels These measures will not be enough to meet the industry targets, and an additional Market Based Measure will be adopted. ICAO has been considering the role of MBMs since 200 and is obliged to agree one in 2016.
4 Market Based Measure Offsetting Scheme After years of debate, ICAO has opted for an offsetting scheme as its preferred MBM. They rejected a global emissions trading scheme Key points below more information is in the GSF Briefing Note
5 Market Based Measure Trade Impact? Recommendations: GSF members with significant air freight volumes should contact their national governments to see if more information is available A key priority for GSF going forward is to deepen our relationships with ICAO, and we aim to engage further on CO2 and other issues in future years.
6 Maritime Emissions CO2 Maritime transport emits around 1000 million tonnes of CO2 annually and is responsible for about 2.5% of global greenhouse gas emissions (3rd IMO GHG study). Shipping emissions are predicted to increase between 50% and 250% by 2050 depending on future economic and energy developments Increased pressure following Paris COP21 deal Debate between IMO member states on whether to take accelerated action
7 Debate at IMO: Maritime Emissions THREE STAGE APPROACH 1. Collect Data - Fuel Consumption Database ACCELERATED ACTION Agree a target for maritime based on total global CO2 limits 2. Analyse data are additional measures needed? Negotiate policy measures to achieve this target 3. Agree details of new policy measure to cut CO2 Proposal is for this to happen at the same time as the 3- stage approach
8 GSF View Three Step Approach is a sensible way forward, provided the data collected is sound We are concerned that the Fuel Consumption Database will not collect actual data on tonnes carried (a proxy will be used) This will make it difficult to set a CO2 target based on CO2g per tonne, and more likely that we end up with an offset / fuel levy scheme
9 GSF View Accelerated Action Given the urgent need to address CO2 emissions we support accelerated action, alongside the three-step approach However, any policy measures must be evidence-based and take account of trade impacts There is a risk that IMO Member States will opt for offsetting and/or global fuel levy without due consideration of other options
10 Maritime CO2 Next Steps IMO MEPC 70, October 24-28, London Talks on accelerated action to be held throughout the week (parallel to main meeting) The Committee will formally approve the fuel consumption database GSF will engage with the debate on accelerated action to ensure shipper concerns are heard We are working with ICHCA, Clean Cargo Working Group and other partners
11 Sulphur: Current position Ships generate ~ 5-10% of global man-made sulphur oxides, which contribute to tens of thousands of early mortalities per year International regulations (MARPOL Annex VI) cap the sulphur content of ship fuel. Since 1 January 2015, ships trading in Emission Control Areas (ECAs) have been required to use on-board fuel oil with a sulphur content of no more than 0.10 per cent The ECAs are the Baltic Sea area; the North Sea area; the North American area; and, the United States Caribbean Sea area.
12 Sulphur global cap Outside the ECAs the current limit for sulphur content of fuel oil is 3.50 per cent. However, this will fall to 0.50 per cent m/m (by mass) on and after 1 January The 2020 date is subject to a review by IMO, to be completed by 2018, as to the availability of the required fuel oil. Depending on the outcome of the review, this date could be deferred to 1 January The IMO Marine Environment Protection Committee will discuss this issue and may rule on the implementation date in its meeting in October 2016.
13 Global cap: ITF estimated trade impacts An ITF report in May 2016 estimated that shipping costs could increase 20% - 85%, depending on the assumptions regarding speed, fuel price and ship size. Costs depend on availability of low-sulphur ship fuel. For container shipping the 2020 requirements could add annual total costs in the order of USD 5-30 billion Postponement to 2025 would mitigate this to a degree, however a 0.50% sulphur cap will come into effect in EU waters from 2020, so a large proportion of shipping will have to adapt by 2020 in any case ITF also point out the crucial importance of global implementation to avoid trade distortions
14 Maritime sulphur emissions: Next Steps This is a question of when, not if, and will create additional costs of trade Debate at the IMO in October Possibly a decision on 2020 / 2025 Global implementation measures Shippers can support early movers by encouraging liners to join the Trident Alliance - a voluntary group who commit to meeting SO requirements GSF will engage more on this issue going forward
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