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Silver Lining at Copenhagen: Nations Inch Toward Consensus on Shipping Fundamentals

By AWT Staff Writer

Though the Copenhagen Accord was viewed as a disappointment by most independent observers, the Bunker's Drafting Group, whose mission was to develop a consensus plan for shipping, made significant headway on the fundamental responsibilities of shipping nations and the treatment of vessels in the likely event that targets for shipping are set.

According to Peter Hinchliffe, the Marine Director for the International Chamber of Shipping, during the first week of discussions, the Bunkers Group was at loggerheads over two competing principles: "Common but Differentiated Responsibility" (CBDR) versus "No More Favorable Treatment" (NMFT).

Under some emission-control schemes, CBDR would imply lower and more permissive targets for developing countries. NMFT, the principle generally embraced by the IMO, would insure common treatment for all ships and nations. The intent of NMFT is to leave unchanged underlying fundamentals of shipping and not introduce disincentives that would alter vessel distribution or global trade. Under NMFT, the flag under which a ship steams would have no bearing on either taxation or credits.

By the second week, a consensus was forming to uphold "No More Favorable Treatment." Though the draft document never reached the larger assembly-- itself floundering on the issue of CBDR--headway on this issue provides a basis for upcoming talks during 2010 by both the IMO and United Nations Framework Convention on Climate Change (UNFCCC). The IMO has scheduled an important meeting of its Marine Environmental Policy Committee (MEPC) for March in Mexico City, while the UN will again grapple with targets, climate change, CBDR and other issues at a meeting in Mexico in November.

Peter Hinchliffe offered insight on the importance of NMFT: "A unique feature of shipping is that fleets and ships cannot be neatly linked to individual countries or even the two categories of countries (Annex 1 and developing countries)." Owners as well as charterers may be of different nationality; ships may be registered under a different flag; and the origin as well as the destination of goods commonly differ. Because of this, trying to implement differential responsibility would have posed an administrative nightmare. It might even have disrupted global trade.

It is not a foregone conclusion that NMFT is now in place but this is the trajectory of current discussion.

Hinchliffe was also quick to point out that "The existing shipping system is amazingly efficient—moving about 90 percent of goods and only producing 2.9 percent of greenhouse gas emissions." In his view, any fundamental changes caused by differential taxation or targets applied to fleets and vessels could undermine this efficiency and maybe even cause a modal shift away from shipping to other forms of transport.

Despite avoiding this pitfall, the lack of clear direction from member nations on overall emission targets presents the IMO with a major puzzle: how can shipping move ahead with targets when targets are not in place for world economies?

Hinchliffe recognizes this as a problem but believes that recent work by the IMO sketches out the tools that can implement the targets once they are agreed to. He points to three major areas of progress by the IMO and the MEPC: design standards for new vessels, definition of effective operations measures, and progress in developing alternative market-based mechanisms (e.g. emission trading, bunker levies and hybrids). He sees no reason why the work in these areas can't move ahead while the world community irons out emission targets.

Two other tools he views as potentially valuable but not yet fully formed are ship and fleet management plans. These might be mandated or considered voluntary. Each plan would indicate measures and practices to reduce fuel and emissions. A proposal sketching out plan contents was submitted earlier in the year to the IMO by the International Chamber of Shipping. The key incentive of such plans would be a shipper's interest in reducing fuel costs.