Banking on Bunkers

The global shipping industry has joined hands with civil society organisations calling on parties at the UN climate talks in Durban to cut carbon emissions from commercial shipping in order to control climate change.

Global shipping emissions remain significant contributors of greenhouse gases, accounting for over 3% of overall emissions. This is dramatically expected to rise with the expansion of global trade. A report by Oxfam International last year documented that a single ship can emit more green house gas emissions in one year than many small island states. Yet under the current global climate regime, they continue to be unregulated.

This week, the International Chamber of Shipping (ICS), which accounts for over 80% of the worlds merchant fleet, has issued a joint call with Oxfam and the World Wildlife Federation (WWF) urging all negotiators to direct the International Maritime Organization (IMO) to take the steps necessary to cut emissions.

“The international shipping industry is firmly committed to reducing CO2 emissions by 20% by 2020, with significant reductions thereafter,” ICS spokesperson Peter Hincliffe stated. “However, the Durban climate change conference needs to give the IMO a clear mandate to continue to deliver further emission reductions through the development of market-based measures.”

The document released by the groups proposes that financial resources be raised and administered by the IMO as part of the sectors efforts to curb emissions.

Moreover, it suggests institutionalising a levy on the global shipping industry, that would serve both to reduce carbon emissions not currently accounted for and provide funds for poorer countries whose own companies would be affected by the extra shipping costs.

The groups insist that an effective regulatory framework for reducing global shipping emissions need to be global in nature and adhere to the UNFCCC principle of “common but differentiated responsibility”.

Whilst measures that could shape the way the funds would be raised remain unspecified, both civil society and global shipping organisations insist that a priority for negotiators should be to learn how to implement this principle  within the global shipping sector.

Central challenges that linger after last years talks in Cancun aside from further curbing emissions include mobilising the money needed to fill the Green Climate Fund.

A major concern of developing nations negotiating the specifics of the Green Climate Fund has been identifying sources of finance.

According to Oxfam and WWF, setting a $US25 per ton carbon price on shipping fuel could generate up to $US25 billion each year by 2020. The groups claim that roughly $10 billion could be channelled into the Green Climate Fund, which, if mandated, aims to raise $100 billion dollars by 2020.

“If governments decide that shipping should contribute to the ‘Green Climate Fund’, the industry can probably support this in principle as long as the details are agreed at the IMO. With the industry’s clear preference for a market based mechanism being a compensation fund linked to the fuel consumption of ships, rather than an emissions trading scheme,” Hinchliffe backs up.

Australian Minister for Climate Change and Energy Efficiency, Greg Combet, stated on Tuesday that “Australia is committed to long-term finance and getting the Green Climate Fund up.”