How is the Shipping Industry Tackling Emissions?

Syllabus: GS3/ Economy, GS3/ Environment

Context

• At the 83rd session of the Marine Environment Protection Committee (MEPC-83) of the International Maritime Organization (IMO), a landmark vote was held to adopt a Market-Based Measure (MBM) for decarbonising international shipping.

What is Green Shipping?

• Green shipping refers to environmentally sustainable practices and technologies used in the maritime industry to reduce the environmental impact of shipping activities.
• It includes cutting greenhouse gas (GHG) emissions, improving energy efficiency, and minimizing marine pollution.

Need for Green Shipping

• Global Emissions: The shipping industry emits around 1 billion tonnes of GHG annually, accounting for about 2.8% of global emissions
• Future Projections: Emissions may increase by 50–250% by 2050 if unchecked.
• Measures Already Enforced:
  • Energy Efficiency Design Index (EEDI): Sets efficiency standards for new ships.
  • Energy Efficiency Management Plan (SEEMP): Operational plans to cut emissions.
  • Mandatory fuel oil consumption reporting: Improves accountability and transparency.

MEPC-83 Proposals for emissions levy mechanisms

• The International Chamber of Shipping advocated for a fixed levy per every tonne of CO₂ emitted.
• China proposed a market-driven approach where ships could trade compliance units and invest in alternative fuels.
• The European Union suggested a fixed Greenhouse Gas (GHG) levy, managed by an IMO-administered fund.
• India proposed a ‘bridging mechanism’, which would target only under-compliant ships to bear the financial burden, while rewarding those using Zero or Near-Zero (ZNZ) fuels.
• Singapore proposed a hybrid model based on India’s proposal, including a GHG Fuel Standard (GFS) and a tiered system rewarding surplus emission units and requiring the purchase of remedial units for underperformance.

What was decided?

• IMO adopted Singapore’s hybrid model, influenced significantly by India’s proposal, as its Net Zero Framework.
• This marks the first time a global industry has adopted a mandatory emissions levy. However, the decision of the MEPC-83 is not final yet.

Roadblocks in implementations

• The MEPC-83’s decision, having approved the Net Zero Framework, needs to amend Annex VI of the MARPOL convention, which governs air pollution from ships.
  • The amendment will undergo a six-month circulation period among all contracting parties to MARPOL. 
• For final adoption, it requires a two-thirds majority of votes from members present and voting; this means that if all 101 parties participate, at least 67 must support the measure. 
• There should be no formal objection by one-third of the parties accounting for 50% of global shipping tonnage.

What are the Concerns?

• Oil-exporting countries, led by Saudi Arabia, opposed any significant transition to green fuels, prioritising the protection of their fossil fuel markets.
  • China and large shipping nations favoured low levies to maintain trade competitiveness.
  • Scandinavian countries demanded credit for early green efforts.
• The original ‘Common But Differentiated Responsibilities and Respective Capabilities’ (CBDR-RC) principle is eroding.
  • Developed countries are pushing for uniform rules, disregarding historical emissions and economic capacities of developing nations.

Impact on India

• Short-Term Impact: India’s international fleet ( around 135 ships) would incur an additional $108 million/year in fuel costs by 2030 — manageable given the scale.
• Long-Term Opportunities:
  • India is investing heavily via the National Hydrogen Mission.
  • Indian ports are developing green hydrogen bunkering capabilities.
  • Indian hydrogen already meets the IMO’s fuel reward thresholds, aiding its export potential.

Concluding remarks

• The MEPC-83’s approval of a market-based emissions framework represents a significant milestone in global efforts to decarbonise the shipping industry.
• If successful, this could serve as a model for other sectors in achieving a low-carbon global economy.

Source: TH