Fertilizer industry representatives were on hand in Copenhagen last week, as delegates to the U.N. climate change summit tried to hammer out international agreements on carbon emissions cuts. One of numerous topics of concern for the industry is measures currently under consideration by the International Maritime Organization (IMO) to reduce greenhouse gas (GHG) emissions from ocean freight vessels.
Going into the conference, many were expecting some form of tax on the high-carbon Bunker C fuel that is used in 80 percent of ocean shipping. According to a recent story in the Wall Street Journal, leaders at the Copenhagen talks hope the fuel tax, which is estimated at $10 billion a year, will prod shipping companies to use cleaner fuels, alternative energy sources, and/or shorter routes.
Options on the table include a straight tax, as well as a cap-and-trade agreement that has some support within the shipping industry. In that system, ship owners could buy or sell carbon offsets, depending on the amount of GHG emissions from the bunker C fuel used in their fleets. Some countries have also reportedly proposed that the $10 billion raised by a bunker-fuel tax should be used to help developing countries pay for adapting to new emissions rules.
In addition to the tax itself, discussions at the summit also reportedly centered on the role the IMO would have in administering any GHG emission rules for the shipping industry. A fertilizer industry source told Green Markets the shipping industry’s strategy is to keep the issue under the care and control of the IMO, which is a U.N. body headquartered in London that the industry believes is the only entity capable of enforcing the tax even-handedly. On Dec. 17, however, international news agencies reported that there was high-level support for moving the administration of the potential GHG tax on shipping outside of the IMO’s control.
GHG emissions from shipping and aviation were excluded from the Kyoto Protocol in 1997, but the IMO was charged with developing a framework for developing GHG shipping regulations. Environmental groups charge that the IMO has failed to deliver a commitment to cut emissions from ocean vessels, and that these emissions could double or triple by 2050.
Those industries that depend on ocean freight are worried that proposed GHG reduction measures could increase ocean freight costs by 5 percent or more for bulk cargoes such as fertilizer. If governments can’t agree on a tax at the Copenhagen summit, the European Union has stated that it will levy a fee on all ships that dock in EU ports.
The Fertilizer Institute told Green Markets that the issue is of “great concern” to the industry, and that preliminary calculations done by TFI have indicated the increase in freight cost could be more along the lines of 10-15 percent. TFI Vice President of Scientific programs Bill Herz was on hand in Copenhagen the week before the summit, and Katherine English, TFI’s vice president of government relations, was there during the event.
Transport & Environment, a European environmental group promoting sustainable transportation initiatives, reported that aviation and shipping are responsible for around 10 percent of man-made climate change emissions. According to the Wall Street Journal, scientists put the GHG contribution from shipping at about 3-5 percent. The IMO, in a recently published update to a 2000 study on GHG emissions from ships, reported that international shipping was responsible for the emission of 870 million tons, or some 2.7 percent, of the global emissions of CO2 in 2007.
By contrast, rain forest destruction, which releases the carbon dioxide stored in trees, is estimated to account for 20 percent of GHG emissions globally.
The first intersessional meeting of the IMO’s Working Group on Greenhouse Gas Emissions from Ships took place in Norway in 2008. The group is tasked with developing the technical basis for – and an actual draft of – the GHG reduction mechanisms that could become part of a future IMO regime to control emissions from international shipping. The IMO’s full package of measures on carbon emission reduction is expected to be finalized by 2011.