The International Civil Aviation Organization (ICAO) concluded a landmark 38th Assembly, receiving endorsement from its Member States on sector-wide strategic planning and exceeding many expectations when it agreed to develop a global market-based measure (MBM) for international aviation.
Will maritime sector follow with an MBM agreement?
This historic step forward emissions reduction, making aviation the first international transport sector to apply a global market-based mechanism to reduce their greenhouse gas emissions, rises the question how will shipping industry respond in the future to tackle shipping emissions?
Earlier this year in June, the European Commission published its finalised proposal for a European Union (EU) regulation on MRV of CO2 emissions from ships. The establishment of an MRV agreement is necessary for the other two steps; the setting of GHG reduction targets for the maritime transport sector and the application of MBM measures.
The landmark MBM Agreement for aviation
The Assembly agreed to develop by 2016 a global market based mechanism to tackle emissions, which can come into force in 2020. The market based mechanism will be accompanied by a series of technical and operational measures to reduce emissions. With this deal, the aviation industry becomes the first international transport sector to apply a global market-based mechanism to reduce their emissions.
Aviation accounts for 3% of global CO2 emissions but ICAO statistics show that international aviation CO2 emissions are forecast to increase between 4 and 6 times by 2050 from the levels of 2010.
"This MBM agreement is an historic milestone for air transport and for the role of multilateralism in addressing global climate challenges," affirmed ICAO Council President Roberto Kobeh Gonzαlez.
"Once again, our States have shown that significant boundaries can be surpassed when we agree to recognize and accommodate our varying circumstances while progressing together towards common goals. Through perseverance and compromise by our Member States and the guidance of our Assembly President and Executive Committee Chair, France's Michel Wachenheim, we have ultimately determined our greener way forward."
ICAO's States agreed to report back in 2016 with a proposal for a global MBM scheme capable of being implemented by 2020. Major efforts will need to be undertaken in order to address the challenges and accommodate specific concerns of developing countries going forward.
ICAO Secretary General, Raymond Benjamin said
"These decisions will now help us to ensure and enhance air transport's critical role in securing and facilitating the free movement of people and goods, expanding global markets and promoting broader and more sustainable social and economic prosperity worldwide. We have much work still before us but also a very clear mandate from our States to continue leveraging collaboration and partnership to ensure practical and effective progress across the board."
38th ICAO Assembly developments on Environmental Protection
The Assembly recognized ICAO's tremendous progress during the last triennium, and reaffirmed its collective aspirational goals and agreed on a comprehensive strategy to progress all elements of the basket of measures namely technology, operations and alternative fuels and set forth a very ambitious work programme for capacity building and assistance to States in the development and implementation of their action plans to reduce emissions.
Further work towards the establishment of robust particulate matter and CO2 emissions Standards by the 39th Assembly in 2016 was fully encouraged. ICAO's achievements with environmental tools were similarly supported, notably with respect to its Fuel Savings Estimation Tool which facilitates assessment of the environmental benefits of operational measures.
Also strongly endorsed was ICAO's continuing work to aid wider implementation of sustainable alternative fuels. The submission of State Action Plans, representing more than 80 per cent of international traffic during the last triennium, was recognized as a significant achievement by the Assembly. ICAO also received separate and strong signs of support for this work through announcements of related financial assistance by the Global Environment Facility and the European Union (EU).
In addition to ICAO's many recent achievements and future work with new technologies, operational measures and sustainable alternative fuels to improve aviation's environmental performance, the topic of a global solution for a market-based measure to augment these technical and operational efforts was a more complex area where full Assembly consensus was concerned.
ICAO forged a landmark MBM agreement amongst its States, realizing another historic and important first for air transport as it now becomes the only major industry sector to have a multilateral global MBM agreement in place to help govern future greenhouse gas emissions.
EC welcomes agreement on global aviation emissions deal
The European Commission welcomed the decision by the UN Assembly responsible for International Civil Aviation (ICAO) to decide on a global mechanism to tackle emissions from aviation.
European Commission Vice President Kallas, Head of the EU Delegation to ICAO and EU Commissioner responsible for Transport said,
"I am very pleased that after long and hard negotiations we finally have a global deal on aviation emissions. This is good news for the travelling public, good news for the aviation industry, but most importantly it is very good news for the planet. We have also avoided a damaging conflict among trading partners. We still have some detailed work to do between now and 2016. But tonight, we have demonstrated that we really mean business when it comes to dealing with aviation's environmental footprint."
EU Climate Change Commissioner Connie Hedegaard, said:
''The EU's hard work has paid off. After so many years of talks, ICAO has finally agreed to the first-ever global deal to curb aviation emissions. If it hadn't been for the EU's hard work and determination, we wouldn't have got this decision today to create a global market-based measure. What matters to us is that the aviation sector also contributes to our efforts to reduce emissions. While we would have liked more countries to accept our regional scheme, progress was made overall and we will now factor this in when, together with the member states and the European Parliament, we decide on the way forward with the EU ETS.''
In the light of this agreement, the European Commission, in coordination with the European Parliament and the EU Member States, will now assess the decision taken at ICAO in more detail before deciding on the next steps with respect to the EU ETS.
MRV of CO2 emissions in shipping industry - The Background
In 2010, the United Nations Framework Convention on Climate Change (UNFCCC), recognised that global warming must not exceed pre-industrial levels by more than 2 degrees centigrade and, in order to do so, this would require GHG emissions reductions of 50% less than 1990 levels by 2050. In committing to this, the EU stated that it would consider further action on shipping GHGs should there be no international agreement and possibly implement a regional market based measure (MBM) if the IMO failed to introduce an international scheme.
In late 2012 the EU stated that it would no longer seek to do this and the focus from the EU is now to take steps towards setting up the MRV (Monitoring, Reporting and Verification) framework which could provide the first step towards achieving their absolute emissions reductions. The European Commission (EC) communicated its intentions with regard to actions towards GHG emissions from ships. Its initial approach is a MRV scheme. The EC released its proposal and the normal EU processes for translating an EC initiative into European law will take some years. Mandatory requirements on ships calling in Europe will thus likely become a reality some years later.
On 28 June 2013, the European Commission published its finalised proposal for a European Union (EU) regulation on MRV of CO2 emissions from ships. The regulation, No. 525/2013, is introduced further to the EU's Climate and Energy Package, adopted on 23 April 2009, which seeks international agreement including emission reduction targets through the IMO or the UNFCCC. The proposed new regulation would establish an EU-wide system for the monitoring, reporting and verification (MRV) of carbon dioxide (CO2) emissions from large ships as from 2018.
The EU strategy consists of three consecutive steps:
(1) the system of MRV of emissions,
(2) the setting of GHG reduction targets for the maritime transport sector, and
(3) the application of further measures, including market-based measures (MBMs), in the medium to long term.
Considering an MBM agreement in shipping industry
Priority is given to the establishment of an MRV system because it is necessary for the other two steps. It is a prerequisite for setting both emission reduction targets and for any market-based measure or efficiency standard, whether applied at EU level or globally.
The timing of any forthcoming market-based measures may depend in part on the experience of the MRV proposal, and any emissions reducing proposals put forward by the IMO.
There are of course, market barriers for the uptake of technologies and operational measures such as the lack of reliable information on fuel efficiency of ships or of technologies for retrofitting ships, lack of access to finance for investments into ship efficiency and split incentives as ship owners would not benefit from their investments into ship efficiency as fuel bills are paid by operators.
Shipping industry on MRV of CO2 emissions from maritime transport
BIMCO making clear its position on MRV stated that before governments can establish realistic targets for the reduction of CO2 as related to the shipping industry, governments must compile reliable data that supports such targets. In support of this undertaking, BIMCO will in principle support a scheme that strives to collect reliable data regarding CO2 emissions from ships engaged in international trade, provided that such a scheme does not place an unnecessary and additional administrative as well as operational burden on the ships and thus potentially impact the safe operation of ships.
The ICS Board recently has reiterated ICS support for the development of a global system of MRV at IMO, provided that the mechanism is simple to administer, primarily based on fuel consumption and bunker delivery notes, and that the system itself will not be used for the development of a full blown Market Based Measure or a mandatory system of energy indexing for existing ships.
However, ICS Chairman, Masamichi Morooka, remarked that
"ICS is very concerned by the recent proposal by the European Commission, to be put before the European Parliament, for a Regulation mandating a regional system of MRV. While the Commission has stated that it would prefer to see the development of a global system by IMO, we are unclear whether the Commission is sincere in its intentions or how the development of a regional mechanism, which also seems overly complex, can be reconciled with what we hope can be developed and adopted internationally."
Read the following articles to find out more:
Maritime transport: first step to reduce emissions
New EU-wide system for the monitoring, reporting and verification of shipping emissions