Carbon reductions

Worldwide shipping as a whole amounts to 2.7% of the total of global carbon emissions. In view of the environmental effects of current levels of emissions, the shipping industry too will have to contribute to reductions in global carbon emissions. If no measures are taken concerning the shipping industry, its comparative contribution to the total amounts of emissions will increase, which is not desirable.
Reduction of the shipping industry’s carbon emissions is at the top of IMO’s agenda. Decision making on targets for reduction and the means of achieving the reductions in question is a complicated process. Especially since the considerations pertaining to the shipping industry have a fundamental impact on the choices made. Said considerations do not apply to land-based industries.

The pivotal question is whether in the shipping industry and its flag states a differentiation can be made between developed nations and developing nations, as it is in other instances.
Developing countries, would like to contribute to carbon reductions proportionate to their capabilities (CBDR: common but differentiated responsibilities). This can be realised as far as land based industries are concerned. For the shipping industry however, the potential risk of flagging out to developing nations’ registers should these nations (and therefore their flags) be entitled to lower reduction targets, is a very real one.
It is expected that first of all reduction targets for all countries –and the ways to achieve these– are to be made clear at global level, before coming to arrangements regarding global shipping and its various sectors. Following the Copenhagen Climate Summit’s failure, all eyes are on the December 2010 Mexican climate conference in Cancun.
The European Commission expects IMO to produce a proposal on carbon reductions in the shipping industry before the end of 2010. In view of the above, it is questionable whether this deadline will be achieved. The Commission has threatened to take its own measures, which would lead to stringent requirements for ships under any EU flag. This stance is very likely to prove a serious impediment to European shipowners’ competitive potential, whose ships are registered under EU flags. Flagging out will be a real risk, leading to the erosion of the European maritime cluster.
As far as the way of achieving carbon reductions is concerned, there are two methods, both of which are still very much in the developmental stages.
The first method is the emissions trading system, which is currently being applied to a number of industrial sectors (like power stations) within Europe. This system allocates or sells emission rights to companies. If they have reduced their emissions, the remaining emission rights may be sold to those companies that have a shortfall of emission rights. Thus a market for carbon emission rights is created (the trading system).
Another aspect of the system is the periodical (annual) reduction of carbon emissions allowed, which is another way of ensuring that companies are compelled to either reduce their emissions or buy (ever more expensive) emission rights.
The second method consists of a levy on maritime fuels. A significant increase in maritime fuels is to stimulate shipowners to reduce fuel consumption and to reduce carbon emissions that way.
Any proceeds from the levy and trading systems could be used to fund incentives for innovation in the maritime industry and to support (developing) nations financially in their adjustments.In this method too, a limit to carbon emissions is being considered. The limit is then to be reduced gradually, thus forcing a reduction in carbon emissions.
The KVNR is in favour of the levy system, because of its comparative ease of implementation, the system’s low transaction expenses and the stability of the levy.