1 international environmental law. The exclusion of shipping - - PDF document

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NETWORK OF EXPERTS ON THE LEGAL ASPECTS OF MARITIME SAFETY AND SECURITY (MARSAFENET) FINAL CONFERENCE National Research Council of Italy, Rome, 10-11 MARCH 2016

Keynote Address “Present and Future Challenges of International Maritime Law in Responding to Climate Change” Aldo Chircop

Canada Research Chair in Maritime Law & Policy Marine & Environmental Law Institute, Dalhousie University, Halifax, Canada

1. INTRODUCTION The United Nations Conference on Trade and Development (UNCTAD) has characterised the climate change challenge faced by international maritime transport in two respects: first there is “the need to reduce its carbon emissions” and, second, and at the same time, there is a need to “adapt to the potentially wide-ranging impacts of climatic changes” (UNCTAD, 2012; website 2016). The maritime industry’s fair share of mitigation efforts has as yet to be defined by the International Maritime Organization (IMO), the body designated by the United Nations Convention on the Law of the Sea, 1982 (UNCLOS) as the competent and leading international organization with regards to international shipping. When it is borne in mind that international maritime transport carries over 80% (some hold even 90%) of the volume

• f global trade, the challenge can only be described as imperative.

Colleagues, the international shipping industry has been called upon to respond with contributions to international efforts in mitigation of greenhouse gas (GHG) emissions. The industry has to come to grips with a prolonged period of radical change and consequent uncertain future because of a need to fundamentally rethink the environmental economics

• f marine transportation in response to climate change.

The last few months may prove to have been pivotal for international maritime law, i.e., the law relating to international shipping, in responding to climate change. First, on 25 November the Assembly of the IMO adopted the Strategic Plan for the 2016-2021 period. The plan includes a commitment to contribute to international efforts to reduce atmospheric pollution and address climate change. Second, in December 2015 there was a deliberate decision at the 21st Meeting of Parties to the UN Framework Convention on Climate Change, 1992 to exclude shipping from the Paris Agreement, 2015 emission targets aimed at holding the temperature increase to well below 2oC above pre-industrial levels while pursuing efforts at not exceeding 1.5oC above pre-industrial levels. The Paris commitments were adopted through an instrument of

2 international environmental law. The exclusion of shipping effectively passed on the responsibility to set targets for GHG reductions to the IMO. The consequence is instruments

• f international maritime law will be used to deliver the marine transportation sector’s

contribution. Third, on 1 January 2016 outgoing IMO Secretary-General Mr Koji Sekimizu of Japan, who spoke against the capping of carbon emissions from ships for fear it would constrain maritime trade, was succeeded by Mr Kitack Lim of the Republic of Korea. In January Mr Lim wasted no time in asserting that “Contributing to the fight against climate change is a top priority for IMO,” alongside its traditional functions in maritime safety, security and prevention of vessel-source pollution of the marine environment. This comes in the wake of lukewarm response in the Organization’s Marine Environment Protection Committee (MEPC) to a 2015 Marshall Islands’ proposal for an emissions reduction target for shipping. Mr Lim wants to see more action from the MEPC and anticipates discussions on emissions to start as early as this April. Colleagues, there is tremendous pressure on the IMO to lead the maritime industry in mitigation efforts. This is no small challenge. However, in addition to support for mitigation, international maritime law can and has responded to climate change in other ways as well. In my presentation I will propose three lines of argument on the role of international maritime law in responding to climate change: the first concerns the role of shipping in mitigation, i.e., the need to reduce carbon emissions and perhaps one day to decarbonize this transport mode. This argument will constitute the bulk of my presentation. To a lesser extent, second, I will discuss international shipping’s efforts in adapting to climate change and, third, the growing role of maritime safety regulation in supporting offshore renewable energy activities. 2. REDUCING CARBON EMISSIONS 2.1 Challenges and opportunities Colleagues, addressing mitigation by using international maritime law tools presents challenges and opportunities. First, a major and perhaps the major challenge, the shipping industry is global and

• transnational. The industry can be best described as an “ecosystem” servicing seaborne
• trade. While the owning and operating of ships is at the centre, there are numerous sectors

providing cargo, services, supplies and crews to ships in a transnational setting. Shipowners may reside in one jurisdiction and flag their ships under another. The majority of world tonnage is registered under foreign flags (UNCTAD, 2015). Ships can easily change their registration and are highly mobile as they emit GHGs across jurisdictions while carrying trade from one State or region and their markets to others. This industry cannot be effectively or exclusively regulated at the national level. Imposing emission reductions at the national or even regional level potentially undermines the universal nature of maritime

3 regulation and aspirations for uniform application in the interests of international trade. Hence the value of curbing emissions through IMO standards. In doing so, we should bear in mind that the IMO work on mitigation has focused on ships engaged in international trade, so that fishing vessels, recreational vessels and ships engaged in domestic trade (e.g., ferries) are excluded. Second, and an opportunity, the IMO is the competent international organization for the regulation of shipping. It has a largely successful record of international regulation for safety, environment protection and security. International maritime regulation is underscored by the principles of universalization (ensuring instruments are broadly subscribed), uniformity (instruments are to be implemented consistently) and with no more favourable treatment (all ships are treated on the same playing field irrespective of nationality). As a result, there is a functional international governance framework that is in a position to address mitigation in an appropriate and effective manner. Third, and a challenge, at this time there is no parallel in the IMO framework to the structures and processes governing national contributions under the Paris Agreement. National governments cannot easily make commitments to lower emissions from their ships

• r on ships that service their trade. As I pointed out, ships can be easily reflagged and

moved out of jurisdiction. Thus contributions to mitigation cannot easily be made by the flag State or State of beneficial ownership, but through some other manner, possibly in the form a generalised contribution of the shipping industry through the agency of the IMO. Possibly, there will be a need for emissions certification and a public registry for ships to maintain records that can be monitored and audited. This will not be analogous to the registry for nationally determined mitigation contributions. A public registry for ships would involve private owners and recorded fuel supplies to those ships. Fourth, both an opportunity and a challenge, the shipping industry has had some success in reducing ship emissions per vessel over time (IMO 2014). However, projections are for further emission increases because the actual volume of emissions from the shipping industry as a whole is hostage to global economic growth and the expectation of carriage of that trade by sea. The Third IMO GHG Study (IMO 2014) revealed that the 2007 CO2 estimate of 2.8% of global emissions had dropped to 2.2% by 2012. However, CO2 emissions are projected to increase by 50% to 250% by 2050 on a business as usual scenario, despite fleet average efficiency improvements of about 40%. In other words, whatever the reductions through technical and operational improvements, and in the absence of “0” emission technologies, growth in global trade will push up ship emissions. The industry is against absolute emissions because it can only control relative emissions, i.e., per tonne mile (i.e., fuel consumed for the distance covered multiplied by the volume of cargo carried). Fifth, both a challenge and an opportunity, is the technology of ship design and propulsion efficiency. On this point there are those that hold that ship technology has not improved much in recent times, whereas others point to improvements (Pew Centre on Global Climate Change, 2010). The diesel engine is one of the workhorses of modern ships and a consideration is whether the diesel engine can in fact be improved to deliver on the promised emissions reductions. Fortunately, there appear to be new propulsion prospects

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• n the horizon, such as LNG which is already being employed on some ships, albeit on a

small scale. Another technological issue is how to coordinate GHG emissions with other atmospheric emissions from ships. For example, SOx emission reductions under MAROPOL Annex VI could lead to increased fuel consumption, and hence not contribute to CO2 emission reduction (UCL Transport Institute, 2014). Sixth, and an opportunity, mitigation measures from shipping could potentially be effectively enforced because of flag State responsibilities in UNCLOS and port State control under various instruments. National maritime administrations and recognized organizations are responsible for the regulatory surveying of ships and certifying ship operations, potentially important tools to ensure international regulations and standards are observed and possibly useful to support market-based measures to support mitigation (e.g., green ship certification). The enforcement of international maritime safety and pollution prevention conventions has been greatly assisted through port state provisions in key instruments and memoranda of agreement among maritime administrations coving virtually all major trading regions. Seventh, and a major challenge, whatever system of market-based measures is adopted and focusing on the amount of carbon emitted by ships per ton mile, will likely affect developing States harder than developed States. The 2015 UNCTAD Review of Maritime Transport reported that more than half of international shipping services developing economies. Two interesting conflicts arise: the first is that under the Paris Agreement developing countries have a different pace of decarbonisation from developed

• economies. The second is that while on the one hand the Paris Agreement is infused with

the equitable principle of common but differentiated responsibilities and respective capabilities, in the light of different national circumstances, on the other hand port state control is guided by the no more favourable treatment principle to ensure the uniform application of international regulations and standard. A market base mechanism for international shipping will need to consider these potential conflicts. 2.2 The IMO response On the eve of the Paris COP 21, the outgoing IMO Secretary-General was emphatic in stating that the Organization was the only one “to have adopted energy-efficiency measures that are legally binding across an entire global industry and apply to all countries.” Indeed, the IMO set out a path as early as 2003 in Resolution A.963(23), adopted on 5 December 2003 and entitled IMO Policies and Practices related to the Reduction of Greenhouse Gas Emissions from Ships. The MEPC was urged to identify and develop mechanisms needed to enable limitation or reduction of GHG emissions from international shipping and to prioritize:

• 1. the establishment of a GHG emission baseline;
• 2. the development of a methodology to describe the GHG efficiency of a ship through

an emission index for that ship, especially for CO2 the main GHG emitted by ships;

• 3. the development of Guidelines by which the GHG emission indexing scheme would

be applied and verified; and

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• 4. the evaluation of technical, operational and market-based solutions;

The MEPC was also requested:

• 1. to consider the methodological aspects related to the reporting of GHG emissions;
• 2. to develop a work plan with a timetable; and
• 3. to keep this matter and IMO policies under review.

The IMO work in pursuit of this resolution has focused on three themes: technical,

• perational and market-based measures. I will discuss these briefly and in turn.

2.2.1 Technical and operational The principal technical measures adopted to date are amendments to the International Convention for the Prevention of Pollution from Ships, 1973/78 (MARPOL), Annex VI, adopted in 2011 (in force on 1 January 2013) and aimed at improving the energy efficiency

• f international shipping. In substance, these measures make mandatory the Energy

Efficiency Design Index (EEDI) for new ships and the Ship Energy Efficiency Management Plan (SEEMP) for all ships. The Design Index is goal-oriented and performance-based, leaving choice of technologies to use in a specific ship design to the industry with the condition that the required energy-efficiency level is satisfied. This provides industry with a measure of flexibility in complying with the Design Index. The Management Plan applies to ships of 400 gross tonnage engaged in international trade and requires operators to improve the energy efficiency of ships on the basis of monitoring, new technologies and improved new practices (e.g., low-carbon fuel regulation, speed regulations, improvements in fuel efficiency). By 2025, all new ships will be 30% more energy efficient than those built in 2014. But this is tricky because ship efficiency may also lead to the building of much larger ships, and there are canal, berth and port cargo handling limitations to service ships larger than the majority of those in operation. Also, replacing bunkers by fuel oil which is lower in GHG emissions (e.g., LNG, modified diesel and biodiesel) could cost 20, 70 and 480% more (Pew Centre on Global Climate Change, 2010). Moreover, slower steaming may mean fewer cargo runs for a ship, reducing the value of its time charter. Additional steps were taken in support of the implementation of the new regulations under Annex VI, including the updated 2014 Guidelines on Survey and Certification of the Design Index (EEDI) and the 2013 Interim Guidelines for determining minimum propulsion power to maintain the manoeuvrability of ships in adverse conditions. MEPC 69 commencing in April 2016 will continue the work of MEPC 68 on developing guidelines to support the uniform implementation of the Annex VI regulations on energy efficiency for ships. Despite these technical and operational measures which could significantly bring down emissions, there is general agreement that much more is needed to reach targets comparable to those in the Paris Agreement, and an industry-wide market-base mechanism is also needed.

6 2.2.2 Market-based Measures Market-Based Measures (MBM) were first discussed in the IMO in 2006 and the motivation is to provide inducements to the maritime industry to invest in more fuel efficient ships and ship operations, and explore potential offsets with other sectors (MEPC 56). Interestingly, some IMO member States are suspicious of MBMs. The Bahamas’ has stated that MBMs has the potential to distort international trade and development of States and has expressed preference for no market intervention (MEPC 60/4/10). However, several States have submitted proposals:  Cyprus, Denmark, the Marshall Islands, Nigeria and the International Parcel Tankers Association (IPTA): These States proposed the establishment of an International Fund for GHG emissions from ships (MEPC 60/4/8), based on a global reduction target for international shipping. Emissions in excess of the target would have to be

• ffset by purchased approved emission reduction credits based on a contribution

paid on every tonne of bunker fuel purchased.  Japan: This is a proposal for a Leveraged Incentive Scheme (MEPC 60/4/37) consisting of contributions based on bunker fuel paid to a GHG Fund. Good performance, in terms of ships meeting or exceeding agreed efficiency benchmarks, would be rewarded through partial refunds.  United States: This concerns mandatory efficiency standards for all ships. An efficiency credit trading programme would be established to induce compliance (MEPC 60/4/12).  World Shipping Council (WSC): This proposal is for incremental mandatory efficiency standards for all new and existing ships according to class. A fee per tonne of fuel consumed would be levied from non-compliant ships (MEPC 60/4/39).  Norway: This proposal is for a sector-wide cap on net emissions and the establishment of a global emission trading/auctioning system (MEPC 60/4/22).  United Kingdom: This proposal is similar to Norway’s, but is based on national rather than global auctioning and with a long-term decreasing cap (MEPC 60/4/26).  France: This proposal is similar to the Norwegian emissions trading system, while differing in others (MEPC 60/4/41).  Jamaica: This proposal advances a consumed bunkers-based uniform levy on vessels calling into port (MEPC 60/4/40).  Germany: This proposal concerns Impact Assessment of an Emissions Trading Scheme with particular consideration of developing countries (MEPC 60/4/54).  International Union for Conservation of Nature (IUCN): This proposal is for a rebate mechanism for a market-based instrument while compensating developing countries for the MBM financial impact (MEPC 60/4/55). Colleagues, the aims of international maritime law in achieving universality and uniformity will be put to the test. IMO Member States will have to find a compromise between a regulatory ethos aimed at universal and uniform rules while at the same time ensuring that efficiency does not trump equity. Whatever MGMs are adopted, they will have an impact on

7 how shipping costs are structured. They can be expected to impact maritime trade and consumer prices. 3. ADAPTING TO CLIMATE CHANGE Perhaps the best example of international maritime law responding to the need to adapt to climate change impacts is in the polar regions. In particular, the Arctic is experiencing twice the rate of warming as other regions. Arctic waters are seeing increased navigation and potentially new maritime trade routes linking Asian markets to North American and European markets. However, the Arctic is ill prepared for an increase in shipping and while infrastructure to support shipping is poor, the IMO has led efforts to raise safety standards for safety and environmental standards with regards to international shipping, for example:  The most far-reaching changes to date concern amendments to two key instruments, namely the International Convention for the Safety of Life at Sea, 1974 (SOLAS), as amended, and MARPOL. These changes include:

• Adoption of the Polar Code, including a new Chapter XIV to SOLAS,

amendments to MARPOL Annexes 1, 2, 4 and 5.

• Amendment of the vital SOLAS Intact Stability Code to include icing

allowances to the mandatory and recommendatory stability criteria and

• ther measures for ensuring the safe operation of ships, to minimize the risk

to such ships, to the personnel on board and to the environment.” The Polar Code relies on the Intact Stability Code.

• The northern boundary of the North Atlantic Ice Patrol under SOLAS Chapter

V were extended in 2006 to cover part of the waters covered by the Polar

• Code. The Patrol monitors and reports on the movement of icebergs on the

Grand Banks in the North Atlantic.

• In 2010 the World-Wide Navigational Warning System was extended into

Arctic waters, thus extending services for safe navigation and search and

• rescue. New navigation areas (NAVAREAS) and meteorological reporting

areas (METAREAS) up to 90 degrees north were established.

• Amendment of SOLAS Chapter VII’s International Code for the Construction

and Equipment of Ships Carrying Liquefied Gases in Bulk (IGC Code) to include a procedure for the carriage of cargo at low temperature.

• The Barents Sea mandatory ship reporting system for vessels larger than

5000 tons (effective on 1 June 2013), was adopted as proposed by Norway and the Russian Federation.  The International Convention on Standards of Training, Certification and Watchkeeping, 1978 (STCW) has been amended:

• A Conference convened in Manila in 2010 reviewed the STCW Convention

and STCW Code, and included voluntary guidance for training for polar

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• seafarers. The training and experience of polar seafarers should include ice

characteristics, ship performance in ice and cold climates, voyage and passage planning for ships in ice, operating and handling ships in ice, international regulations and local requirements, equipment limitations, safety precautions and emergency procedures, and environmental considerations.

• Chapter 12 of the Polar Code relies on STCW with regards to manning and
• training. The expectation is that that ships operating in polar waters are

properly crewed by qualified and trained personnel in accordance with Chapter V of STCW and STCW Code.  Passenger vessel guidelines for remote regions, such as the Arctic and Antarctic, have been adopted:

• In 2007 the IMO Assembly adopted a resolution setting out the Guidelines on

Voyage Planning for Passenger Ships in Remote Areas. With increased cruise ships in the Arctic as a result of ever increasing navigational access, these guidelines provide advice for voyage and passage plan appraisal, planning and execution. 4. SUPPORTING OFFSHORE RENEWABLE ENERGY Colleagues, international maritime law has also responded to climate change-related initiatives to for the development of offshore renewable energy. As you are aware, offshore wind farms are playing an increasingly critical role as a new source of renewable energy, most especially in European waters and as a result of EU 2020 renewables target. Offshore windfarms, subsea structures and submarine cables and their safety zones are huge consumers of space for the long term and potentially impact on

• ther established ocean uses, either by excluding them (e.g., fishing) or potentially through

some spatial displacement (e.g., navigation). The safety of construction and maintenance vessels (known as OSVs) and their workers are also an issue. While marine spatial planning is essential and goes a long way in managing user conflicts, it is insufficient. Various SOLAS regulations, standards and guidelines have also been used to enhance safety and minimise user conflicts, for example:  Construction and personnel standards:

• Code for the Construction and Equipment of Mobile Offshore Drilling Units,

1989

• Guidelines for the Design & Construction of Offshore Supply Vessels, 2006
• Code of Safety for Special Purpose Ships, 2008
• International Code on Intact Stability, 2008

 Area based management tools and operations rules:

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• Collision avoidance regulations, 1972 (COLREGS)
• General Provisions on Ships’ Routeing, 1985 and 2003 Guidance Note.

Routeing measures are defined as: “Any system of one or more routes or routeing measures aimed at reducing the risk of casualties; it includes traffic separation schemes, two-way routes, recommended tracks, areas to be avoided, inshore traffic zones, roundabouts, precautionary areas and deep water routes.”

• Recommendation on Safety Zones & Safety of Navigation around Offshore

Installations & Structures, 1989 Area-based management measures have been used in association with various

• ffshore windfarms which interacted with navigation. For example in the United Kingdom’s

territorial sea a traffic separation scheme (Sunk TSS) was designated in the Thames Estuary (IMO, 2011). The TSS boundary is aligned with the planned Galloper windfarm. In the Belgian EEZ an area to be avoided was designated in the vicinity of the Thornton and Bligh Banks (IMO, 2011) where windfarms are planned. There were similar initiatives by the Netherlands for routeing measures between Texel & North Hinder (IMO, 2012). 5. CONCLUSION Colleagues, in a submission to this April’s MEPC meeting the International Chamber of Shipping states that we “probably continue to be dependent on fossil fuels for several more decades.” Clearly the process of decarbonizing international shipping is going to take a long time and market measures taken today may have unintended consequences. And yet the industry is between a rock and a hard place: if the industry does not act, the consequences are dire; and there is no option but to take hard mitigation measures. Faith is placed in international maritime law through the IMO. While there are positive elements in how international maritime law is responding to climate change challenges, there is much at stake if the IMO fails to deliver on mitigation. If the IMO does not mount a credible effort, there could be serious implications in terms of whether a future meeting of the Parties to UN Framework Convention on Climate Change might have to revisit the decision to defer to the IMO on ship emissions. Also, an unsatisfactory IMO effort might also encourage the EU to reconsider the preference it has expressed for a global approach led by the IMO, rather than the COP forum and regional

• initiatives. For example, the Regulation of 29 April 2015 creating an EU-wide legal

framework for monitoring, reporting and verification of CO2 emissions from ships, to become effective in 2018, could evolve into something more, raising concerns over regionalism in maritime regulation. As Belgium, France, Germany, the Marshall, Morocco and Solomon Islands have submitted in a document for April’s MEPC, and I quote: [We] … invite the Committee to initiate the relevant proceeding to define the fair share of the international maritime sector in the global reduction efforts of the

10 international community to keep the increase in global average temperature well below 2oC above pre-industrial levels. They concluded with: We trust that IMO is the organization best equipped to take on this challenge. Thank you for listening to the presentation.