07-10-2021 Why shipping’s net zero consensus is about to become a political bargaining chip, By Richard Meade, Lloyd’s List
A political and commercial consensus now exists to accelerate shipping’s decarbonization targets to net-zero emissions by 2050, effectively doubling the ambition of the current internationally agreed targets. But despite backing from political heavyweights to consider an immediate change to the IMO’s timeline, a formal agreement is likely to remain a matter of political aspiration until at least 2023, due to a combination of climate finance haggling and procedural ambiguity. A total of 45 member states have either formally backed net zero proposals submitted to the IMO, or indicated support for those papers in advance of a key meeting of the IMO’s MEPC meeting next month.
Meanwhile, the International Chamber of Shipping has thrown its representative weight of 80% of the global fleet behind the call to hit net zero, reinforcing the groundswell of corporate commitments that last month saw over 160 heavyweight industry leaders backing moves to decarbonize international shipping by 2050. Even among those major developing nations holding out against the politically more difficult issue of market-based measures and carbon pricing, an agreement within the IMO to set the revised target to net zero by 2050 is now widely seen as an inevitable move. Given the political influence of those governments backing the proposed revisions to the IMO strategy, and their stated support for the Paris Agreement aligned timeline, it is technically feasible that the required consensus of member states attending the next MEPC meeting in November could be reached. But it won’t be.
While a consensus over the end target of net zero by 2050 exists, that process remains linked to the planned revision of the IMO’s initial 2018 strategy to reduce greenhouse gas emissions due to be delivered in 2023. That process promises to be a divisive battle between developed and developing states still wrangling over the basics of climate finance contributions, not to mention the mechanics of market-based mechanisms and which institutions control climate cash. While next month’s MEPC77 meeting is likely to see governments signaling their support to accelerate the IMO timeline, the specific wording of statements from the floor are likely to be more ambiguous with nobody anticipating an immediate call for a revision of targets. As senior IMO insiders and IMO veterans describe it, if there is no clear indication on how climate funds will be redistributed and allocated, no developing countries will be conceding any ground on the 2050 timeline target. Rather the current crop of proposals will be aired next month in what will be tentative indicator of political ambition, then swiftly kicked into the mid-term strategy revision process where it will become part of a convoluted bargaining process between states seeking to extract concessions in return for movement on agreements and timelines. That process will conclude in 2023.
Despite the political signaling on show in the MEPC77 papers, no state is yet showing the full hand when it comes to climate negotiations. As one IMO insider described it, “they are eyeing each other up, seeing how far each of them are prepared to go. We’re not going to see much more than the broad directional strategy at MEPC77, if we’re lucky we might get some idea of where the numbers lie. MEPC is not going to save the world – it’s climate mood music”. The key submissions to next month’s MEPC77 are those backed by the US, UK, Norway, and Costa Rica and a second paper submitted by Pacific Island nations Kiribati, Marshall Islands, and Solomon Islands. The first paper proposes a revision to the initial IMO Strategy, focusing on the need to increase the ambition for emission reductions by 2030 and 2050. The submission also sees the level of ambition for 2040 as on track for the revised 2050 objective of zero total annual greenhouse gas emissions from the international shipping sector.
The Pacific islands similarly propose a resolution committing to reduce greenhouse gas emissions from shipping in line with the temperature goals set by the Paris Agreement. In the wake of both papers, states have slowly been aligning themselves with these ambitions, first via a regional agreement between 11 Asian states to back the Pacific Island proposal and voice support for a $100 carbon levy to be introduced by 2025. The fact that Bangladesh and the Philippines were among the 11 is a significant indicator that diplomacy behind the scenes is already underway. Just six months ago Bangladesh had opposed the proposal for a carbon levy inside the IMO pending further analysis while the Philippines had dismissed the paper, alongside stalwart refuseniks Russia, South Africa, and the Cook Islands on grounds of added costs for shipping. Both papers have also latterly found a unified support from the 27 European Union countries, albeit with the phrasing of “general support” to initiate a revision of the IMO strategy, suggesting that the European Commission is in no hurry to have that battle immediately.
The ICS submission to MEPC77 is similarly caveated with pragmatic context, stating that a net zero target by 2050 will only be plausible if governments take the necessary actions to achieve this. While the deadline for submissions to MEPC77 closed on October 1, states can still align themselves with papers already submitted and it is understood that the US is using its diplomatic heft to push for additional states to be added before the meeting opens. The US leadership position comes as John Kerry, US special presidential envoy for climate, is busy lining up a high-level coalition of industry first movers to help make clean technologies more affordable in the run-up to the COP26 climate summit, which will conclude just before MEPC77 starts. Several of the Global Maritime Forum’s Getting to Zero coalition are already signed up, including Maersk and Trafigura — both high-profile advocates of a more ambitious IMO strategy. While the upwards revision of net zero by 2050 now looks an inevitable when, rather than if, given the political momentum behind the proposals, those backing the revision argue that timing matters. As the European Union submissions makes clear, there are legally binding deadlines in play already. The bloc has committed to an economy-wide greenhouse gas emissions reduction target under the Paris Agreement, which has been translated into European Climate Law. This makes the EU climate objectives — of at least 55% net GHG emission reductions by 2030 below 1990 levels and climate neutrality by 2050 — legally binding for EU member States. Putting net zero targets into the IMO will allow it to filter onto statute books and that has real legal and institutional value, even if much of the political promise remains aspiration rather than tangible. It informs ministers’ day-to-day policy decisions. It also provides an explicit signal to businesses and investors across the maritime value chain that the net zero transition is non-negotiable and irreversible.
Business was a critical component of the success of the Paris Agreement, as Mr Kerry is fond of saying. He should know — he was the US Secretary of State in 2015 and played a key role in getting 195 countries to sign the agreement. Industry has taken the unique step of proactively setting out the measures that must be taken by governments to make decarbonization by 2050 a reality rather than a soundbite, argues the ICS submission to MEPC77. It remains to be seen whether Mr Kerry will be able to muster the required political support within the IMO to match that ambition.