Copenhagen's impact on Shipping

The strained United Nations climate change conference in Copenhagen is proving to be anything but united as far as member states are concerned. However, even as nations negotiate with the many contentious issues on emissions that have emerged, it appears that the pressure on the shipping industry to do something about its carbon footprint is very much on. Critics allege that the International Maritime Organisation (IMO) has done precious little to push for a reduction in greenhouse emissions from ships and that the maritime industries should be now forced to fall in line with others around the world.

Media reports suggest that many options have been tabled to regulate emissions from shipping. Included are market based mechanisms of emissions trading gaining momentum elsewhere in industry, offset crediting, a 'bunker fuel charge', or indeed a  workable combination of all these. The consensus is that the IMO must be made responsible for the final plan that should be robust and sustainable. There are, however, some voices demanding that the United Nations Framework Convention on Climate Change (UNFCCC) be responsible for the bunker levy fund that would be collected. Although details are sketchy since the negotiations are secretive, observers at the conference believe that the IMO option would be best for the industry.

If the tax is approved, a £100bn “climate aid fund" will be setup to help poorer countries deal with climate change. Almost a quarter of this fund will come from taxes or an emissions trading system specifically for industries such as shipping as aviation, amongst others. Although the official British view is that emissions trading is preferable over taxes on aviation and shipping, political parties in the UK are divided on this stand. The opposition parties there say that 'polluters must pay', rather than taxpayers.

Shipping always has suffered a bad reputation amongst the general public; Copenhagen proved to be no exception. Chanting the slogan, "Hit the Production" demonstrators confronted police outside the Oesterport rail station close to the headquarters of Danish shipping giant Moeller-Maersk last weekend. Although 200 protestors were detained, the industry's cause was not helped by the media headlines and images that flashed around the world.

Industry opinion within shipping is as divided as it is at Copenhagen. Some European shipowners agree that something needs to be done to regulate

Greenhouse gas emissions, and point out that 5pc of all global carbon dioxide emissions come from ships. Unsurprisingly, many developed countries agree.

Initial resistance from developing nations has thawed somewhat, though many say that this would have a negative impact on their industries. However, a few delegates told reporters privately that the bunker tax proceeds going to the climate aid fund was a good idea. Increased pressure on shipping was seen to mount; airlines enter the European emissions trading scheme in 2012, and critics allege that it is high time shipping paid its share too.

Meanwhile, the IMO is said to be keen to be part of the administration of any scheme that is approved at Copenhagen; it probably fears that a move to get the UNFCCC to control the fund would challenge its regulatory authority. However, most analysts say that a tax regime would be extremely difficult to implement or enforce with so many vendors of bunkers located in unregulated or poorly regulated countries.

The tax regime is hardly a done deal, anyway, with negotiators saying that any agreement will be very difficult, and more so in the present tense atmosphere at the Cophenhagen summit. Nevertheless and regardless of the final outcome at the talks, it appears obvious that the maritime industries are slated to come under increasing pressure on global warming in future.

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Managing Climate Change.

Mumbai, 19 December: The United Kingdom’s apex representative body for commercial shipping, the Chamber of Shipping, announced this week that it is recommending a global and open emissions trading regime in response to the threat of climate change. Martin Watson, President of the Chamber, said, “This is a bold and far reaching decision that gives a lead to the rest of the shipping world. We recognise that shipping, which carries 80 per cent of all world trade goods, and 90 per cent of the UK’s trade, must make a significant contribution to the battle to reduce mankind’s carbon emissions.


Commercial shipping remains a global industry that has been, so far, one of the few to remain outside the purview of any country’s carbon emission reduction legislation. This is because the complex web of global operations, ownership and registry makes it unclear where exactly the emissions should be allocated. The Chamber of Shipping recognises this and sees a global regime as the best way forward; it also feels that an international law will stop ships being moved between legal jurisdictions to avoid carbon regulation.


Shipping is the most ecologically friendly way of transporting goods and therefore needs to be encouraged. Mr. Watson quoted in a media release, says, “The carbon cost of carrying a ton of freight by ship is 10 times less than by road, and 100 times less than by air. Shipping is by far the most carbon friendly transport mode. However, because so much freight is carried by sea, shipping does produce nearly three per cent of total emissions. We need to take whatever action is needed to try to limit those emissions, but without accidentally causing freight to be shifted from ships to other, less carbon friendly forms of transport. That would be catastrophic in terms of total emissions.”


Substantial improvements with new technologies have been made by the industry. Economies of scale and applied research have resulted in huge improvements; a container ship today emits about 25% of the carbon dioxide that a box ship did in the 1970’s, while it carries ten times the number of containers. In fact, the maritime industry has been far ahead in promoting carbon efficiency compared to others.


The Chamber’s thinking is in line with IMO moves to create a ‘ship design index’ that will encourage technical innovation for new ships as well as the UK Government’s ‘Climate Change Act’ adopted last month. The Chamber believes, that “shipping can most effectively contribute through emissions trading. This will enable ship operators to decide whether to invest in emissions reducing technology/research or operating practice and thereby qualify for carbon credits. Alternatively, ship operators can decide to support significant improvements in efficiency in high polluting industries, particularly those in the developing world.”


Mr Watson said, “Although an emissions trading scheme for the shipping industry remains a concept rather than a defined path, we believe that the industry, if it wishes to remain in control of its own destiny, must decide upon a direction of travel and strive to deliver it. I believe that if we can provide leadership and make a coherent and compelling case then other national associations will follow.”


Environmental groups have welcomed the Chamber’s bold move. Peter Lockley, Head of Transport Policy at WWF UK said that he was pleased at the initiatives. “If designed well, the scheme would put a price on maritime carbon emissions, speeding up the drive for cleaner ships and helping to pay for low carbon development in poorer countries. It would position shipping as a progressive and responsible industry”, he said.