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Can The International Shipping Industry Be Part of the Climate Solution?

The international shipping industry is a major greenhouse gas emitter, accounting for about three percent of all greenhouse gas emitted last year. For reference, this is roughly equivalent to the total annual emissions of Germany.

Because these emissions occur on international waters, the shipping industry was purposefully left out of the 2015 Paris Climate Agreement. Instead, a UN agency called the International Maritime Organization is the forum for multilateral diplomacy to curb emissions in international shipping. In early July members of the IMO met in London for negotiations.

Joining me to discuss why this meeting was so significant to international efforts to curb greenhouse gas emissions is Susan Ruffo, Senior Director and Senior Advisor for Ocean and Climate at United Nations Foundation. We kick off discussing the impact of international shipping on climate change and then have an extended conversation about what happened at this meeting of the International Maritime Organization, which includes a new target for emission reduction and progress towards enacting a levy on carbon emissions from shipping.

This episode is available on your preferred podcast listening app. 


What is the International Maritime Organization and What is the IMO’s Role in Climate Diplomacy?

Susan Ruffo The International Maritime Organization is basically responsible for the safety and security of international shipping and also prevention of pollution from international shipping. So it’s been around since about 1948 working on those issues. 

Mark Leon Goldberg And I assume, like other U.N. specialized agencies, it’s governed by its member states, probably with like an executive board and a director general of some sort. 

Susan Ruffo Correct. It has a secretary general who actually will be changing over next year. It also has a sort of council of member states that run the governance of the body. It has about 175 member states. 

Mark Leon Goldberg And these member states were meeting recently in London to discuss ways to mitigate the role that international shipping plays in greenhouse gas emissions. Before we discuss the content of that discussion and debate in London, where the Imo’s headquarters is located. Can you just give listeners a background on what impact the international shipping industry has on greenhouse gas emissions and climate change more broadly? 

Susan Ruffo So shipping actually is a fairly large contributor to greenhouse gas emissions, but we don’t usually think about it. It accounts for about 3% of global emissions, which doesn’t sound like a lot. That’s roughly the same as the country of Germany. So just to give you a perspective. So it’s a major emitter. And if we can do something about those emissions, that’s obviously a good thing. The challenge is that about 80% of goods travel by ship. So changing the way that that trade works is really complicated and it affects sort of global supply chains everywhere, you know, sort of everything we use and everything we eat. The other interesting thing about shipping emissions is they’re not actually part of the Paris Agreement, although they’re covered under the general goals of the Paris Agreement. So, you know, trying to keep warming below 1.5 degrees Celsius, those emissions are not really regulated or accounted for anywhere within the Paris constructs. So because they take place on international waters, on the high seas, they’re not accounted for in countries nationally determined contributions or their emissions reductions plans. 

Mark Leon Goldberg So I see. So while the Paris Agreement covers like national emissions, because these emissions occur in international waters, they’re specifically excluded from the Paris Agreement. I would imagine, though, that that’s where the IMO sees its role as kind of stepping up and contributing to Paris, even though it’s excluded from Paris. 

Susan Ruffo Absolutely. So the IMO sees itself as contributing to achieving the Paris goals and helping to manage those emissions that are not part of that national voluntary system that comes under the Paris Agreement. The other sector that might be similar is aviation, where there’s a separate international organization that deals with aviation. So the IMO, it’s not governed by the UNFCCC or the climate change agreements, but it aligns itself with those goals. And the point of the strategy that they just adopted and the earlier strategy that they have is really to think about how shipping can contribute to those overall goals. 

Mark Leon Goldberg So therefore it would be a meeting of the International Maritime Organization in which climate change emission reduction goals would be sort of discussed and set amongst its member state. And that’s the context for the meeting in London. 

Susan Ruffo Correct. They’re basically revising their greenhouse gas strategy the first time the IMO really took this on. They adopted a strategy in 2018 to reduce global greenhouse gas emissions from shipping. So this is a revision of that strategy and ultimately it was a significant increase in the ambition of that strategy. 

Mark Leon Goldberg One more question on emissions in the shipping sector. I mean, I assume and am I correct in assuming that the emissions probably mostly come from the kind of fuel that’s used in big tankers that traverse oceans? 

Susan Ruffo Correct. Shipping tends to use some of the dirtiest and heaviest of the fossil fuels. So when it’s burned by the big tankers and the big bulk carriers and other ships out there, it really does contribute quite a bit to CO2 emissions, also particulate and sulfur. So it’s not a clean burning fuel by any means. 

What Were the Big Outcomes of the International Maritime Organization’s London Meeting on Emissions Regulations in Shipping?

Mark Leon Goldberg So going into this meeting in London, there was a lot of anticipation and frankly, a really decent amount of media coverage of this meeting for the fact that it would be the forum in which the shipping industry would seek to come together in an agreement around reducing emissions. What were some of the expectations and key debates headed into this meeting?

Susan Ruffo I think there was a lot of expectations, a lot of hopes, but also a lot of very different opinions going into this meeting. I mean, as you said earlier, the IMF doesn’t usually get a lot of press. So it was sort of an interesting atmosphere to walk into the meeting. And I think there were a couple of key issues on the table. One is how much would the sector and would the member states of the IMF agree to cut emissions? What was the target going to be? Was it going to be ambitious enough when they set their first target in 2018? The target was to cut emissions from the sector 50% by 2050, which was a great start. It was the first time that they’d really taken on a strategy like that, but it was not enough to keep the Paris Agreement targets within reach. So the question this time was could they keep Paris within reach? Can they be Paris aligned? I think the second big question on the table was how does that transition happen? Is it going to only benefit the countries of the north that typically have some of the biggest shipping lines that are big importers and exporters? Or would the developing countries in the global South be able to benefit from this? Would it truly be a just and equitable transition that leaves no one behind to pick up some of the Paris language? And the third piece is how would they do it? And one of the key things about the IMO that’s very different than the U.N. policy is it is a regulator. So it actually has the authority to enforce regulations that it puts in place. So the strategy is not a binding strategy. It sort of targets a set of aspirations. It’s a framework for what they want to do. But the next step is actually developing the regulations that will help them get there. And those are binding. So that’s a very different scenario than the UNFCCC. And how they use that authority is one of the big questions going into the meeting and also one of the big questions coming out. 

Mark Leon Goldberg And was one of the potential ways that they could use their authority, this idea of imposing some sort of levy on emissions. I had seen that floating out there as something that advocates in particular were seeking to have enacted or make progress on during this meeting. 

Susan Ruffo Yes, that was one of the big questions on the table. The idea was basically could the IMO or should the IMO put a price on GHG emissions coming out of the shipping sector? And there were several proposals on the table. This has actually been being discussed for quite a while. In about 2013, about ten years ago they actually did have a debate on this that in the end they didn’t they reached no conclusions on. But it’s come back their proposals on the table, one of the most ambitious of which was put forward by several Pacific Island states. And the idea is to put a price on carbon emissions from the sector, maybe $100 a tonne, use that to essentially close the price gap between these old polluting fossil fuels and the new fuels of the future that we need in order to get zero emissions shipping. So basically close that price gap, use some of the proceeds of that levy to reinvest in the sector, to create the infrastructure and the training and other things for seafarers that are needed to make this happen, but also to support mitigation and adaptation in developing countries, and particularly some of the most vulnerable, like small island states that are being already affected by climate change. So was a pretty bold proposal. 

Mark Leon Goldberg So I’ve never covered the IMO per se, but I’ve covered dozens of these kinds of meetings at the U.N. and it’s specialized agencies. And inevitably what you see are kind of coalitions of countries banding together to pursue certain agendas. Oftentimes there’s like a more higher ambition coalition, and then there are other countries that have certain industries on their territory that might not benefit from the proposals of the higher ambition countries. Generally speaking, what were the kind of blocs of countries negotiating during this meeting? 

Susan Ruffo Yeah, it’s very much like other international meetings, as you described the differences. Maybe the blocks are a little bit different at the IMO than they are at the UNFCCC and maybe sometimes less solid. But what we had going into this meeting was some interesting groupings. We had very high ambition proposals from small island states in the Pacific as well as the US, the UK, Canada really pushing on this idea that set Paris aligned targets for the IMO. 

Mark Leon Goldberg So the U.S. was on the side of the Higher Ambition coalition?

Susan Ruffo Yes, I would say the US, UK, Canada and the Pacific Islands were at the highest levels of ambition, really pushing for complete alignment with Paris and 1.5. You saw other groupings of countries, you know, South America, China and others that were not as ambitious going in. And that’s obviously where a lot of the conversation happened. The other big piece of it was the levee that you mentioned, this emissions pricing mechanism, as they called it. There were very different opinions about what that could and should look like. You know, again, there became sort of a real divide between some blocks. Again, Pacific Islands and other developing countries that really put this bold proposal forward and were really supporting it as a way of getting the emissions reductions that are needed and really catalyzing that change quickly, but also having the resulting revenue as something that could be used to help them and others transition. And to give you a sense. The World Bank estimated that if there were $100 a tonne price put on carbon from the shipping sector, that could generate 40 to $60 billion a year. We’re talking about significant funding here. 

Mark Leon Goldberg And which countries were adamantly or which blocks, I should say, were more adamantly opposed to that idea? 

Susan Ruffo I would say the strongest set of voices against that idea were primarily from Latin America. And the biggest concern was, you know, they’re countries that are big producers, often of agricultural products or other kind of bulk commodities like iron ore. They’re far from their markets. They obviously rely on shipping to get both imports and exports. And they were afraid that increasing the cost of shipping would increase the cost to them of getting things in and out of their markets and ultimately hurt their competitiveness. And we heard that from other countries like South Africa that had similar concerns. So I think there was a real refrain there. I think there was a bit of an attempt to spin this as a divide between developed and developing countries, which I don’t think was really accurate for the countries that were supporting this. We saw some of the most vulnerable developing countries like the Pacific and others from the Caribbean and some from Africa that really felt like this could be a way to not only cut emissions but also help them to the transition, as well as countries from the European Union that had agreed during President Macron’s Finance summit that this could be a way to also generate some funding to help support developing countries. But you had on the other side, other developing countries that were concerned about their markets. And I think that’s going to be the big question going forward is how do we resolve some of those questions and concerns? And can you design a mechanism that really does take all of that into account? 

Will There Be a Levy on Carbon Emissions from International Shipping?

Mark Leon Goldberg In the end, there was no agreement on the levy of carbon emissions from the shipping industry. What were, however, some of the outcomes of this meeting? 

Susan Ruffo So the big outcome from the meeting was that they adopted a new strategy and that strategy set a new target for cutting emissions from the sector that is essentially net zero emissions by 2050. And then they’ve also chosen some what they called intermediate checkpoints to really ensure that we don’t just wait till 2050 to try to do everything, but we’re actually reducing emissions along the way. So they’ve set a checkpoint of 20 to 30% reductions by 2030, 70 to 80% reductions by 2040 going to the net zero by 2050. So it’s an ambitious trajectory. It’s not the Paris alone trajectory that we had hoped for that the Pacific and the US and the UK were pushing for. But it is an ambitious trajectory. So that was a really big deal. I think the other things that have gotten overlooked a bit in the headlines are that this strategy really enshrines this concept of a just and equitable transition. It’s in the vision statement of the strategy. It’s in the section where they talk about the implementing measures that they’re going to now design, that it has to contribute to this idea of a just and equitable transition, which essentially is saying this isn’t just going to benefit the rich countries of the North. We’re going to think about what developing countries need, how they’re going to be impacted, how they’re going to benefit, and also thinking about sort of the seafarers and others that work in this sector and what needs to be done for them in order to make this transition. That’s a highlight that has gotten missed, but was a very important part of the conversation and something that developing countries really, really push for and I think is showing that developing country voices are becoming stronger and stronger in the climate debates. We saw that a little bit last year at COP with the establishment of the Loss and Damage Fund. I think we’re seeing it again now. And so that makes me hopeful that there will be sort of a better way to design some of this work. 

What Does A Just Transition for the Shipping Industry Mean in Practice?

Mark Leon Goldberg Can I just ask you to explain in a little more detail what does a just and equitable transition in the International Shipping Center look like? What would it mean in practice? 

Susan Ruffo That’s not defined. So I can tell you what I think. I can tell you sort of a general perception. But it’s not written down anywhere in an agreed text. 

Mark Leon Goldberg What do you think? You study this? 

Susan Ruffo I think there are a couple of things. I think for a just transition that typically talks about a workforce and what we’re talking about, there is about 800,000 seafarers as well as all the people who work in ports. And if you think about what needs to happen in the maritime sector, we’re talking about essentially transforming ships, ports, fuel supply lines, all the infrastructure that supports ships when they’re at port, puts power into them, fuels them from fossil fuels into something else. And that’s something else is probably going to mean a mix of things. So we need to train all of those people to be able to use the new fuels of the future and build all of that infrastructure and their communities around those ports. Obviously, that will be impacted. So I think when we talk about just transition, we’re really thinking about all of those people who need to be trained and brought through that transition. When you think about an equitable transition, I generally think of that in terms of how countries and communities will fare in this transition. And there’s several pieces to it. One is just making sure that it’s sort of procedurally fair and that countries have a voice, which I think we saw last week at the IMO, that, you know, more and more developing countries are participating, are leading, are putting ideas forward. Historically at the IMO, developing countries have been really underrepresented. And so of the 175 members, you might get 40 that participate in meetings on a regular basis. Know, we’re hoping to change that. We saw about probably 90 at this last meeting and about 60 to 70 of those really actively participating. We definitely need those voices. We also need to make sure that the impacts of what the IMO decides, particularly in its regulations, don’t disproportionately fall on developing countries. So if you raise shipping costs, islands are often impacted because they import and export everything. Developing countries rely on exports of often commodities. They can be more impacted. So how do you address those disproportionate impact to make sure that those countries are not left behind? And how do you set up the rules so that in the end, you know, all the new zero emissions, clean fuel ships are not running just between the US and Europe or the US and China, but they are also going to Africa and around Africa and to the Pacific Islands and other places. So we’re not just pushing off all the dirty fuel into those developing countries. 

Mark Leon Goldberg So one of the key outcomes you just mentioned was to get to net zero by 2050. Like, how will this happen? Is it really mostly a matter of replacing the fuels that power ships right now? Are there certain technologies that need to be embraced in order for this to happen? 

Susan Ruffo There are things we can do right now. It’s not just about all new technologies. So it’s not just sort of a, you know, a wish or a hope. Most people and analysis show that we can meet the 2030 targets with existing technologies and energy efficiency increases. And what that means in practice is ships go slower and so they use less fuel, they use it more efficiently. We change propellers, we clean hulls, we do things that we know how to do that actually increase the energy efficiency of what we’re burning right now. That can get us a fair amount of the way. The targets they’re aiming for for 2030 are 20 to 30% on a Paris aligned trajectory. They should be 37% reductions by 2030, which is also possible. So I think that’s the first stage, right, is how do we really maximize what we can do now and that we know how to do. And then the later phases when we get to the 2014 2050 goals, that’s going to require some shifting of fuels and that’s looking at a range of fuels. But I think most people are guessing that the fuels that would become the big game changer are going to be green hydrogen derived fuels like green ammonia. And those will require new engines, new ships, new bunkering, new infrastructure. So we’ve got some time, but there will need to be a lot of investment to make that happen. 

Key Outcomes from the International Maritime Organization Meeting on Emissions Reduction in Shipping

Mark Leon Goldberg So what was the third key outcome of this IMO meeting that you’d want to highlight? 

Susan Ruffo So I would say the third key outcome is that they are still very much discussing already. There was never going to be a final decision on the regulatory measures that the IMO is going to take at this meeting. This meeting was designed to adopt the strategy and make sure that’s in place as a framework and then talk about what the regulatory measures are that go to the next phase of development. So under that decision where they decided on, you know, these are the regulatory measures we’re going to look at and we’re going to move them on for discussion and adoption. One of those is a technical measure, something like a global fuel standard. There’s general agreement that’s a good thing, an efficient way to drive emissions reductions. The other piece of that is some sort of economic component, like an emissions pricing mechanism. Which could be a levy, and that is very much on the table, which I find really exciting and precedent setting. I mean, if you think about a global regulator that can enforce what it puts in place, talking about putting a price on carbon, an entire sector, that’s quite a move. We’re a long way from that being adopted. Yet there’s still a lot of discussion. There’s still, you know, all of the concerns and objections that we talked about earlier. But it is on the table. It is a real discussion and I think it is something that’s going to get a lot of attention as we go forward. 

Mark Leon Goldberg So going forward, like what’s the next key moment in this discussion, this debate on how the international shipping industry can contribute more to climate and solutions and be less of a problem. 

Susan Ruffo So I think there’s a couple of things. One is they will be designing regulatory measures, which everyone knows is not a very sexy conversation. You know, there’ll be lots of technical details, but the bottom line is, you know, within the next 12 to 18 months, they will have a series of kind of final measures that they want to adopt. Like I said, the global fuel standard, some kind of pricing mechanism, most likely potentially a universal levy, and those will likely be adopted in 2025 and then go into force around 2027. So it sounds like a long time from now. On the other hand, anyone who knows regulatory processes knows that they don’t move quickly. The other piece I would say is they’re also looking at the same time that what they call short term measures, which are these energy efficiency measures that we were just talking about. And those are going to be updated kind of over the next couple of years as well. So I think that will help to drive some of those more immediate emissions reductions while they’re working on the fuel standards and other things that will kind of kick in when we look at these new fuels. And one thing is if you think about the lifespan of a ship, we’re talking 20 to 30 years for these investments. So if you think about the fact that the IMO is now set these checkpoints for what emissions should be for 20, 30, 20, 40 ships that they’re buying right now will be on the water in 2040 and they will have these regulatory measures in place by 2030, definitely by 2040. So if you’re investing in a ship right now, you’re thinking about what that ship will cost you when those measures come into place and you’re starting to make bets that, ooh, a fossil fuel ship might be really, really expensive to run by 2040. So you’re probably thinking about how you get dual fuels or ships that you can convert over when that time comes and those regulations really hit into force. So it sounds like a long time, but the investments that are made in this sector are long term investments, and they’re already thinking now about what they need to be doing in order to make sure they are not stuck with some stranded assets by 2040. 

Mark Leon Goldberg Susan, thank you so much for your time. This is really helpful. 

Susan Ruffo Well, thank you so much for being interested.