Background

Parties to the United Nations Framework Convention on Climate Change (UNFCCC) have recognised that the convention is unsuitable to address emissions from international shipping. The Paris Agreement, adopted at COP 21 in December 2015, is silent about emissions from international shipping.  It does, however, expect all sectors of the economy to contribute to the global efforts.

The International Maritime Organization (IMO) has agreed on a Road Map to develop a Comprehensive IMO GHG Strategy by 2023. The Initial Strategy (IS) was adopted at MEPC 72 in April 2018 with a vision to decarbonise shipping as soon as possible. The IS contains the following important objectives:

• to reduce CO2 emissions per transport work, as an average across international shipping, by at least 40% by 2030, pursuing efforts towards 70% by 2050, compared to 2008; and
• to peak GHG emissions from international shipping as soon as possible and to reduce the total annual GHG emissions by at least 50% by 2050 compared to 2008 whilst pursuing efforts towards phasing them out as called for in the vision as a point on a pathway of CO2 emissions reduction consistent with the Paris Agreement temperature goals.

Tackling the barriers to transition may be the single most important issue facing the shipping industry. The barriers cut across commercial business practices, which are normally beyond the scope of international regulation.

As the transition to zero carbon shipping is likely to take a generation of ships, it necessitates having a mechanism to facilitate a level playing field in the marketplace for ships of both conventional and novel technological state. This is because freight rates are unlikely to correlate with the cost of operating ships using vastly more expensive fuels as long as cheap fossil fuel alternatives exist.

Removing the barriers for transition require new commercial solutions and shared responsibilities between charterers and shipowners. BIMCO will develop the necessary contractual solutions to assist the transition.

BIMCO’s position

• Regulation of GHG for ships in international trade must be agreed at IMO and be transparent, harmonised and applicable to all ships irrespective of the flag they fly. Any possible GHG regulation for shipping should not regulate the capacity of the world fleet. The objective should be to limit GHG emissions from ships without compromising the shipping industry’s irreplaceable role in the global supply chain.
• BIMCO welcomes the IMO Initial Strategy (IS) and supports its vision and objectives.
• BIMCO supports the establishment of an IMO Maritime Research Board to fund innovation, paid for by a mandatory contribution on fuel used by ships.
• BIMCO supports market-based measures (MBM) as a necessary part of the solution to provide incentives for owners to invest in and operate low-carbon emissions ships.
• Any MBM for international shipping should be flag neutral and apply to the appropriate entity responsible for the emissions.
• BIMCO is concerned that the unilateral inclusion of international shipping in the EU Emissions Trading System (ETS) would negatively affect the negotiations between IMO member states and could inhibit global solutions.
• BIMCO agrees that GHG savings achieved through speed optimisation should be locked in through application of power limitation. Additional emissions reductions should also be pursued by converting waiting time at ports into sailing time.
• BIMCO hopes that mandatory Carbon Intensity Indicators (CIIs) lead to commercial business practices which will result in lower CO2 emissions.
• BIMCO believes that operational efficiency indices or Carbon Intensity Indicators (CIIs), are potentially misleading on an individual ship basis and not always representative of true ship’s operational efficiency.