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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