Shipping sector agrees new deal to cap sulphur levels

The International Maritime Organisation (IMO) is finally introducing steps - albeit small - to reduce the environmental impact of the shipping industry, after 170 countries agreed on a new global deal to introduce a cap on sulphur emissions in 2020.

During a Marine Environment Protection Committee (MEPC 70) in London on Thursday evening (27 October), the IMO and country representatives agreed on a deal to place a 0.5% cap on sulphur emissions from ships – to be introduced in 2020 – five years ahead of the predicted timeframe.

The deal will see sulphur emissions reduced from the maximum 3.5% of fuel content limit and could reduce overall sulphur dioxide emissions by 85%, with analysts claiming that the deal could prevent 200,000 premature deaths.

Commenting on the agreement, Transport & Environment’s campaigner Bill Hemmings said: “This is a landmark decision and we are very pleased that the world has bitten the bullet and is now tackling poisonous sulphuric fuel in 2020.

“This decision reduces the contribution of shipping to the world’s air pollution impact from about 5 percent down to 1.5 percent and will save millions of lives in the coming decades.”

The shipping industry has been under pressure to introduce global targets that consider environmental impacts for some time. This week’s MEPC 70 conference marks a significant step into introducing a global shipping deal, with Friday’s meeting expected to introduce an agreement to reduce the industry’s carbon footprint by 2%.

Price on carbon

While the sulphur agreement will go some way to combatting air pollution, it is expected to add an extra $40bn to the container shipping sector alone. Companies will now have to turn to external mechanisms to reduce costs while complying with the regulatory agreement.

At the midway point of the MEPC conference, delegates moved from IMO’s London headquarters to attend an AkzoNobel event, which awarded Italian shipping company the Grimaldi Group with the largest ever issuance of carbon credits in the industry.

In total, 14 Grimaldi vessels received 109,617 carbon credits – with each credit awarded for every tonne of verified CO2 that is saved. Companies that enrol in the credit scheme have to switch to AkzoNobel’s Intersleek anti-fouliong hull coating, which the company claims have achieved total annual reductions of 17 million tonnes in carbon emissions.

For AkzoNobel’s director of sustainability André Veneman, the credit scheme is proof that the shipping industry has the “tools at its disposal to achieve reductions”, and that IMO should build on the recent announcement to ensure it isn’t the “last man standing” in failing to combat climate change.

“Clean technologies can make a real difference in improving the operational efficiencies and reducing emissions through fuel savings in this industry,” Veneman told edie. “You don’t want to wait for regulation to comes to the industry, and you can make a very nice basket of market-based measures, but you want businesses to drive change and improve the sector.

“Shipping should deliver its fair share in global fight against climate change and it cannot be the last man standing. Companies will now be asked to be much more transparent and verify and demonstrate their decarbonisation process. De-risking your company in the shipping industry is probably even more exciting because often fuel use is the biggest cost factor. Everything the shipping industry can do to reduce fuel use is about the profitability and sustainability of the industry.”

Veneman suggested that the industry would need to introduce certain measures to ensure that emissions in the sector don’t grow to an anticipated 17% of global emissions. Amongst the mechanisms that the IMO could introduce, Veneman felt that a carbon tax, offsetting schemes and AkzoNobel’s carbon credit programme were all viable catalysts.

The Grimaldi Group is yet to decide whether it will cash in the credits – valued in excess of $500,000 based on the current market – and Veneman suggests that the company hold on to them until the shipping industry introduces carbon reduction plans and the “failed mechanism” of the European Union’s Emission Trading System (ETS) is fixed.

“In the aftermath of Paris, governments, countries and the private sector have more awareness to accelerate action,” Veneman added. “About a year ago, you could still argue that carbon schemes and targets wouldn’t be alive and kicking – and I think that now it is clear to everybody that legally-binding targets and carbon mechanisms are needed.

“Grimaldi should keep these credits because the price will go up. We’ve proven that we can monetise carbon emissions, but more importantly reward the innovators and the road testers that are willing to drive change.”

In September, the price for an ETS allowance fell below €4, the lowest it’s been since 2013. In direct contrast, companies such as Kering and Statoil are operating with internal carbon prices well above €50.

Veneman suggested that these internal prices – usually adopted by companies actively seeking to de-risk portfolios against climate impact – should be adopted at a global level to ensure that nations can go beyond the goals established as part of the Paris Agreement.

Matt Mace

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