What is COP26 and how does it affect shipping and the offshore sector? 

To provide some background to members, we must look back to 1992 when the concept of a ‘COP’ in the context of climate change emerged with the founding of the United Nations Framework Convention on Climate Change (known as the UNFCCC) at the ‘Earth Summit’ in Rio in 1992.  

The Earth Summit was a conference which followed the first report of the Intergovernmental Panel on Climate Change (IPCC) in 1990, an international collective of climate scientists who meet regularly to summarise the state of the art in climate research.  

The 1990 IPCC Assessment Report, for the first time set out a scientific consensus for some of the core principles of climate change, i.e.: 

1. Greenhouse Gases (GHGs) cause a warming effect on the planet; 
2. Human activities are increasing the concentration of GHGs in the atmosphere; 
3. Taken together, GHGs and human activities will contribute to a heightened warming effect. 

The founding of the United Nations Framework Convention on Climate Change (UNFCC) in 1992 set out to establish an international forum for collaboration on climate change and establish the rules for the way in which State and non-State actors could come together to discuss climate change. 

Since 1992 there have been 26 COPs and which have been taking place annually bringing together hundreds of nations and transnational entities, such as the European Union, to discuss climate change. The outcome of key COPs which members have probably heard of are the 1997 Kyoto Protocol at COP3 which established legally binding emissions reduction targets and the 2015 Paris Agreement at COP21 which is a legally binding international treaty on climate change whose goal is to limit global warming to well below 2 and preferably 1.5 degrees Celsius, compared to pre-industrial levels. To achieve the long-term temperature goal of the Paris Agreement, countries aim to peak greenhouse gas emissions as soon as possible and then see them reduce in order to achieve a climate neutral world by mid-century. However, even though data suggests that global emissions likely peaked in 2019, followed by an unprecedented 6% drop in 2020 due to COVID-19, emissions are now rising sharply again and will grow for the next three years before starting to decline. This is clearly not in line with the commitment for emissions reduction of the Paris Agreement. 

We have heard the latest warning from the IPCC in its’ Sixth Assessment Report published in August that the internationally-agreed threshold of 1.5 degrees above pre-industrial levels of global heating was “perilously close. According to the UN Secretary-General António Guterres, the Working Group’s report was nothing less than “a code red for humanity. The alarm bells are deafening, and the evidence is irrefutable”. The stakes could not have been higher at COP26. 

Members may ask how the commitments made by Governments in the Paris Agreement impact upon shipping. International shipping is regulated by the International Maritime Organization (IMO) which is a specialised agency of the United Nations. The same governments who attended COP21 in Paris and committed to keeping global warming to 1.5 degrees are also represented at IMO and the targets from the Paris Agreement were incorporated into IMO’s initial Green House Gas Strategy which was adopted in 2018 and which sets out a vision to reduce GHG emissions from international shipping and phase them out, as soon as possible in this century. IMO’s strategy includes a specific reference to “a pathway of CO2 emissions reduction consistent with the Paris Agreement temperature goals,” including a commitment to reduce the carbon intensity of international shipping and reduce CO2 emissions per “transport work,” as an average across international shipping, by at least 40% by 2030 and 70% by 2050 compared to 2008 levels. So, there is a direct link between the outcome of COP21 and decisions taken by Governments at the IMO. 

IMCA has consultative status at the IMO and I attend meetings of IMO’s Marine Environment Protection Committee and Working Group on Green House Gases on behalf of IMCA members supported by colleagues from IMCA’s Marine Policy & Regulatory Affairs (MPRA) Committee. Like COP21, commitments made by governments at COP 26 will impact decisions taken by IMO to revise its’ Green House Gas strategy and bring in stricter measures. That is why we actively followed the proceedings. 

Under Article 91 of UNCLOS, the UN Convention of the Law of the Sea, every vessel is ‘flagged’ to one of the 175 IMO Member States and assumes the nationality of that Flag State and therefore is subject to its’ laws. Because shipping is an international and interconnected sector, we do not want to end up with is a patchwork of regulatory regimes on Green House Gases throughout those member states which are then imposed on vessels. We want regulatory certainty and a level playing field. The only way the industry can reach the decarbonisation goals set out in IMO’s GHG Strategy is to move away from using conventional fossil fuels which produce high levels of carbon emissions. The offshore sector is already seen as one of the first movers in taking steps to reduce the carbon footprint of its vessels, transitioning to hybrid power, using batteries and cold ironing where available in ports. We want to see governments recognising these efforts and rewarding them rather than raising the bar even higher because we have already made the first move. 

The shipping industry represented at IMO is acting together on greenhouse gases because we see disparity among the approaches being proposed by different governments and the speed with which they are willing to move. To ensure the industry is treated fairly, not matter what the flag of the vessel, we are advocating a $2/tonne carbon levy on fuel which would be used to fund vital research and development into future fuels and new technologies which will enable the industry to meet its’ emission targets. While hydrogen and ammonia are recognised as potentially the best fuels of the future, there are many issues which need to be addressed by governments such as: 

1. Where the key bunkering sites will be located throughout the world; 
2. What infrastructure will be needed in national territories to produce the new zero carbon fuels; 
3. How the safety and quality of the fuels will be assured; 
4. What other technologies could be used in conjunction with the fuels of the future, e.g., carbon capture and storage; 
5. How the transition to new fuels and new technologies will be financed. 

These are decisions which need to be taken by governments at IMO and the role of the industry representatives is to help drive the decision-making for the best possible outcome for our sector. That is why we watched the commitments made by governments at COP26 and want to see the rhetoric turned into action. 

IMCA supported a side event taking place at Strathclyde University, led by the International Chamber of Shipping and aimed at delivering the industry’s key message which is that the shipping industry is committed to a decarbonisation agenda. This is evidenced by the fact that in recent weeks we have seen several of the world’s largest shipping and offshore companies commit to net zero carbon emissions by 2050.  

This commitment:  

1. Underscores the need for R&D investment in shipping to achieve zero-emission ships  
2. Explains how a political ‘de-risking’ needs to occur to allow this investment to take place  
3. Insists on a ‘just transition’ that does not leave behind the developing nations of the world, with a commitment to infrastructure development 

We wait to see if the decisions taken at COP26 lead to any greater certainty for the shipping sector on the likely regulatory path ahead. 

Outcome of COP26

COP26 did not directly negotiate on shipping but the international shipping industry organised a side event which was supported by IMCA.

Because shipping was not a key consideration at COP26, there were no outcomes immediately impacting shipping  immediately; the implications are more indirect and long term.

At COP26 the International Maritime Organization (IMO) reported its progress and achievements in addressing GHG emissions from international shipping including the adoption in June this year, of mandatory short-term measures to reduce the carbon intensity of international shipping by at least 40% by 2030.

In accordance with a work plan approved in June 2021, IMO has started to consider concrete proposals for mid- and long-term GHG reduction measures, including potential market-based measures (MBMs), i.e. rules which push for behavioral change by using incentives to reduce GHG emissions from shipping.

Several declarations were made during COP26 containing a broad range of ambitions focusing on general reductions levels and specific pollutants.

The Global Methane Pledge – aims to reduce global methane levels by 30% before 2030. Participants joining the Pledge agreed to take voluntary actions to contribute to a collective effort aimed at reducing global methane emissions by at least 30 percent from 2020 levels by 2030. It is estimated that this could eliminate over 0.2˚C warming by 2050.

This pledge will impact upon IMO’s consideration of LNG as a potential intermediate fuel, as methane slip will be an issue in the effort to reduce methane emissions. IMO’s Life Cycle Assessment of fuels, which will consider well to tank and tank to wake emissions will also have consider methane emissions in light of the Global Methane Pledge.

The Clydebank Declaration for green shipping corridors

The Declaration aims to establish green shipping corridors between selected ports based on voluntary cooperation between private entities.

Signatories included Australia, Belgium, Canada, Chile, Costa Rica, Denmark, Fiji, Finland, France, Germany, Republic of Ireland, Italy, Japan, Republic of the Marshall Islands, Morocco, Netherlands, New Zealand, Norway, Spain, Sweden, The United Kingdom of Great Britain and Northern Ireland and The United States of America.

In supporting the establishment of green corridors, signatories recognise that fully decarbonised fuels or propulsion technologies should have the capability to not add additional Green House Gases to the global system through their lifecycle, including production, transport or consumption.

The Declaration on Zero Emission Shipping by 2050 – in which signatories committed to strengthen global efforts to achieve zero emissions from international shipping by 2050, including at IMO to adopt goals for 2030 and 2040 that place the sector on a pathway to full decarbonisation by 2050, and to adopt the measures to help achieve these goals.

COP26 established a Just Transition Maritime Task Force to drive decarbonisation of the industry focusing on the role of seafarers in shipping’s green transition. The task force aims to push forward shipping’s climate goals decarbonisation pathway especially with regard to competence and training.

The Glasgow Climate Pact, which was adopted at the end of COP26, saw signatory countries increase climate ambition and action from the Paris Agreement in 2015, and set out new rules to reduce greenhouse gas emissions including establishing a global carbon market which will impact on shipping when Market-Based Measures (MBMs) are adopted by IMO.

The most immediate impact of COP26 will be its impact, going forward, on policy decisions taken at IMO in the Marine Environment Protection Committee (MEPC) and its’ Intersessional Working Group on Green House Gases (ISWG-GHG) and the review of IMO’s GHG Strategy which will be finalized in 2023.

Marine Environment Protection Committee (MEPC 77)

At MEPC 77 which followed immediately after COP26, there was increasing pressure on the Member States to increase their level of ambition to reduce GHG emissions from shipping. In his opening remarks, the IMO Secretary-General stressed that the Glasgow Climate Pact clearly underscores the need for accelerated action in this critical decade.

Among the issues considered at MEPC 77 were:

1. proposals related to the 2050 level of ambition and the revision of the Initial IMO GHG Strategy;
2. the outcome of the ninth and tenth meetings of the Intersessional Working Group on Reduction of GHG Emissions from Ships in conjunction with proposals for mid- and long-term GHG reduction measures; and
3. a revised proposal from the Industry, supported by Japan, Nigeria, on the establishment of the International Maritime Research and Development Board (IMRB) and Fund (IMRF) as referred to in; and
4. proposals for the revision of the IMO Ship Fuel Oil Consumption Data Collection System (DCS).

With regard to MBMs, MEPC 77 agreed that there was a need to have a balance between the measures and their impacts and that any agreed MBM must decrease climate pollution from ships as soon as possible in this decade, and bridge the price gap between fossil and zero-carbon sustainable fuels, bringing shipping into line with the Paris Agreement’s 1.5°C target and helping to reach a zero-GHG sector by 2050.

MEPC foresees that a basket of MBMs will be needed and will be considering several proposals in the Working Group on GHGs including:

• A Carbon tax/levy
• Low GHG Fuel Standard
• A Cap and Trade system whereby a fuel GHG intensity limit and an emissions cap and trading system are applied as a package in order to establish a cap and a price on GHG emissions through trading of allowances, while the fuel GHG intensity limit would set a mandatory technical requirement

With regard to mid-term measures, the MEPC has set out a three-phased approach:

1. Phase I
   • Collation and initial consideration of proposals for candidate measures
   • Spring 2021 – Spring 2022
2. Phase II
   • Assessment and selection of measures to develop further
   • Spring 2022 – Spring 2023
3. Phase III
   • Development of measures to be finalized with agreed target dates

A number of work streams will form part of IMO’s mid-term measures including:

Development of Life Cycle Assessment (LCA) Guidelines

1. Determine criteria for fuel pathway certification schemes
2. Will include upstream and downstream emissions
3. Well-to-tank emissions – categorisation of fuels & calculation methodology
4. Tank-to-propeller emissions – emission factors
5. Involvement of experts

Methane slip

This issue, also highlighted at COP26 as part of the Global Methane Pledge, will be included in the development of the LCA Guidelines.

Volatile Organic Compounds (VOCs)

MEPC will identify ways to reduce VOCs

Outcome of MEPC 77

The Shipping press has reported that one of the most worrying outcomes of MEPC 77 is the prospect of regulatory uncertainty since there may not be uniformity in dealing with climate measures relating to emissions due to be imposed on the shipping sector.

IMCA will continue to represent members at the IMO and the MPRA Committee will follow discussions closely to ensure the voice of the offshore marine contracting sector is heard.

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