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Market News

 March 05, 2012
Lack of progress on shipping emissions may force EU's hand

 International meeting concludes without agreement on market-based measures

Little progress was made on advancing market-based measures to deal with shipping emissions when a UN meeting on the issue closed on Friday, according to delegates, raising the prospect of unilateral EU action.

Divisions between countries over when measures should be introduced and their potential meant the week-long conference at the International Maritime Organisation (IMO) in London concluded with few agreements, an attendee told BusinessGreen.

"Everyone agreed we should do it [introduce market-based measures], but we couldn't agree the process," he said.

"Developing countries... want to move it far to the right and developed countries want to get on with it."

Instead, talks became mired in technical details and debates about the level of technology transfer between the two groups, he added, while delegates could not agree a steering group for an impact study proposed by IMO secretary-general Koji Sekimizu examining nine potential measures.

An IMO spokeswoman told BusinessGreen that proposals including a levy on bunker fuel or a global emissions trading scheme remained on the table and would be addressed again at the next IMO meeting in early October.

Shipping contributes about three per cent of global emissions, but a rise in trade volumes and declining emissions in other sectors mean this is predicted to rise to around 18 per cent by 2050 if no action is taken.

Last year countries did agree a series of energy efficiency measures for ships, which will come in at the beginning of 2013, but this has not been viewed as sufficient progress by the EU, which has threatened to bring shipping into its own emissions trading scheme (EU ETS).

"While we have a clear preference for global action on measures to reduce emissions from shipping, we don't see the IMO on track to deliver reductions consistent with the globally accepted maximum 2ºC objective," a Commission spokesman said.

Earlier this month, Brussels published a consultation on four policy options, including a compensation fund, an emissions trading system, a fuel or carbon tax and a mandatory emission reduction per ship.

This ends in April and is due to be followed by an impact assessment, a draft proposal sometime between April and June and a final proposal in the last three months of the year.

If the EU does decide to bring shipping under the EU ETS, it will be keen to avoid the bickering that followed the inclusion of aviation from the beginning of this year.

Much like shipping, the aviation industry has argued for a global solution to reduce emissions, but has failed to provide one in a decade of negotiations through the International Civil Aviation Organisation (ICAO).

But ICAO secretary-general Raymond Benjamin told news agency Reuters last week that the UN body intends to have a proposal on measures to address emissions from aviation by the end of the year.

Brussels has faced severe criticism for its policy of requiring airlines to pay for carbon emitted on all flights in and out of EU airports, facing down a US legal challenge only to be told Chinese carriers will not comply. Last month 23 countries agreed a package of countermeasures designed to undermine the rule.

And an adviser to the Saudi Arabian government issued the latest broadside call for the EU to back down after warning the petroleum-rich nation is opposed to the rule because of its potential impact on oil demand.

"It isn't under any climate agreement," Mohammed al- Sabban said at a conference in Jeddah today. "It isn't under any international system. So that is why it has been objected, not only by the US but other countries. The pressure is huge for Europe to revise their position, and I think they will do that."