Maritime transport, sustainable development and climate change: some - - PowerPoint PPT Presentation

“On course for a better world” – Kickoff seminar

Danish Shipowners’ Association

9 February 2012, Copenhagen Maritime transport, sustainable development and climate change: some issues for consideration

• Dr. Regina Asariotis

United Nations Conference on Trade and Development

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Shipping is the lifeblood of world trade

Source: Simon Bennett, ICS, presentation at UNCTAD Ad Hoc Expert Meeting 2011

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Maritime Transport: an engine for development

• Over 80% of the volume of world merchandise trade (and 70% by value) is carried

by sea Developing countries traditional exports: often low value/high volume raw products; increasingly also manufactured goods (Asia).

• Maritime transport provides access to global markets: crucial for all countries -

developed and developing - including those that are landlocked Key factors for developing countries: connectivity, transport costs

• Shipping and ports are key-nodes in global supply-chains and therefore vital for

global trade

• Seaborne trade is a derived demand – reflecting developments in global economy

and merchandise trade

• Maritime transport faces various emerging challenges ... including those related to

energy and climate change

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I. Economic growth and merchandise trade - shipping and seaborne trade: some recent trends II. Emerging challenges and some issues to monitor III. Climate change: implications for maritime transport IV. Relevant recent work by UNCTAD

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5 10 15 2007Q1 2007Q2 2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4

World Advanced economies Emerging and developing economies

World GDP Growth 2007-2013 (Quarter over Quarter, annualised)

Source: IMF, World Economic Outlook Update, January 2012

Commodity Prices: Continued Volatility (2007-2011)

50 100 150 200 250 300

2007M01 2007M04 2007M07 2007M10 2008M01 2008M04 2008M07 2008M10 2009M01 2009M04 2009M07 2009M10 2010M01 2010M04 2010M07 2010M10 2011M01 2011M04 2011M07 2011M10 Food Industrial Materials Energy

Source: IMF, World Economic Outlook Update, January 2012

World export volumes of goods, Jan 2006-Aug 2011

Source: UN/DESA World Economic Situation and Prospects, 2012. Based on CBP Netherlands Bureau for Economic Policy

• Note the collapse in world merchandise export volumes in 2009 and the recovery in 2010
• Emerging economies (green line) are driving the world recovery in trade (grey line);

developed countries (red line) are lagging behind, recovering at a much slower rate

Economic growth and merchandise trade: Key Points

 Rapid and strong recovery in world economic output and trade (both merchandise and services) in 2010. However, recovery is fragile and its sustainability threatened  Data indicate that world economy is on the brink of another major downturn: growth in output and merchandise trade has already slowed considerably during 2011 and is expected to slow down further in 2012 and 2013  Economic woes in many developed economies a major factor in the global

• slowdown. Failure of policymakers to address jobs crisis and prevent

escalation of sovereign debt distress and financial sector fragility would send global economy into another recession.  Developing countries and economies in transition expected to continue to stoke engine of world economy, but growth in 2012-2013 expected well below 2010 and 2011. Growth in China and India expected to remain robust.  Commodity prices have increased. They remain highly volatile.

Growth in container, tanker and major dry bulks volumes, 1990-2011 (indices, 1990=100)

Container Major dry bulks Tanker

100 200 300 400 500 600 700 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Review of Maritime Transport 2011. Based on Review of Maritime Transport, various issues; and on Clarkson Research Services, Shipping Review and Outlook, Spring 2011.

Global Container Trade, 1990-2011 (TEUs and annual % change)

20 40 60 80 100 120 140 160 180 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

• 15%
• 10%
• 5%

0% 5% 10% 15% 20%

Million TEU (Left) Percentage Change (Right)

Source: Review of Maritime Transport 2011. Based on Drewry Shipping Consultants, Container Market Review and Forecast 2008/09; and Clarkson Research Services, Container Intelligence Monthly, May 2011.

In 2010 container trade volumes experienced an unexpected robust recovery fuelled by a surge in demand across nearly all trade lanes. Global container trade volumes bounced back at 12.9 per cent over 2009, among the strongest growth rates in the history of containerization

World fleet by vessel type (million dwt, 1 January 2011)

100 200 300 400 500 600 700 800 900 1 000 1 100 1 200 1 300 1 400 1 500

Other 31 45 49 58 75 49 92 96 Container 11 20 26 44 64 98 169 184 General cargo 116 106 103 104 101 92 108 109 Dry bulk 186 232 235 262 276 321 457 532 Oil tanker 339 261 246 268 282 336 450 475 1980 1985 1990 1995 2000 2005 2010 2011

Source: UNCTAD Review of Maritime Transport 2011. Compiled by the UNCTAD secretariat on the basis of data supplied by IHS Fairplay. (Seagoing propelled merchant ships of 100 gross tons and above).

Note: By end 2010, the world order book for new ships had been reduced by about 28 per cent compared to its pre- 2008 crisis peak. Reduction amounted to 45 % for container ships, 34 % for tankers, and 18 % for dry bulk carriers.

World seaborne trade by country group, 2010 (% share in tonnage)

10 20 30 40 50 60 70 Loaded 34 60 6 Unloaded 43 56 1 Developed economies Developing economies Transition economies

Source: UNCTAD Review of Maritime Transport 2011.

Developing countries continue to account for the main loading and unloading. Dominance of large emerging DC; concentration of resources/raw materials, which make up the bulk of seaborne trade; increasingly also manufactured cargo Asia is by far the most important loading and unloading region (40 % of total goods loaded/ 55% of total goods unloaded)

Involvement of DCs in Supply of Maritime Transport Services

Maritime Sector/Activity Number of developing countries in the top 10 Market share of developing countries in the top 10, %

Ship building (dwt) 6 76.4 Ship scrapping (dwt) 5 99.0 Insurance services: P&I (dwt) 2 2.4 Ship financing ($) 1 8.7 Ship classification (dwt) 2 10.6 Ship owning (dwt) 4 26.1 Ship registration (dwt) 6 53.2 Port operation: container terminals (TEU) 5 67.4 Ship operation:container ships (TEU) 5 41.5 Ratings (Head count) 8 89.5 Officers (Head count) 6 75.4

Source: UNCTAD Review of Maritime Transport 2011.

• Developing countries are expanding their participation in a range of different maritime businesses.
• Strong positions in ship scrapping, registration, and the supply of seafarers
• Growing market shares in capital-intensive/technologically advanced sectors e.g. ship building and owning.
• Ship financing, insurance services and vessel classification: some developing countries have recently been

demonstrating their potential to become major market players.

• II. Emerging challenges and some relevant issues to monitor

 Uncertainty relating to the world economic and financial situation  «Emerging» global challenges which are interconnected e.g. energy, environmental sustainability and climate change  Energy: access, security and prices  Climate change: mitigation and adaptation

“Globalisation, climate change, and escalating energy costs are a strategic nightmare for shipping companies and they all have one thing in common – fossil fuels.” Martin Stopford, Clarksons

 Other issues, including  Seafaring crisis  Piracy  Supply chain security  Food and water crises  Geopolitical developments including political unrest in certain regions of the world  …

How are maritime freight rates affected by rising oil prices?

• Shipping heavily reliant on fuel oil for propulsion: implications for cc mitigation efforts

and transport/trade costs (energy crisis)

• Following peak in oil prices in July 2008, UNCTAD conducted an empirical analysis
• f the relationship between oil prices and maritime freight rates

Oil Prices and Maritime Freight Rates: An Empirical Investigation (UNCTAD/DTL/TLB/2009/2) Focus on container transport, but also some dry and wet bulk trades (iron ore, crude oil). Main findings:

• rising oil prices drive up maritime freight rates in all three trades examined, with

estimated elasticities varying, depending on the market segment and the specification

• For container trade, the effect of oil prices on container freight rates is estimated to

be larger in periods of sharply rising and more volatile oil prices, compared to periods

• f low and stable oil prices
• Important implications for maritime transport and trade, in view of continued volatility

and expected sustained high levels of oil prices

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• III. Climate change: implications for maritime transport

Climate change

• a global challenge and “a defining issue of our era”
• compelling scientific evidence (e.g. IPCC 2007)
• huge potential costs associated with inaction: up to 5-20% of

global GDP, annually (STERN Review 2006)

• a serious development threat, with the Least Developed

Countries (LDCs) and Small Island Developing States (SIDS) being the hardest hit

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The climate change debate

Two sides of the “climate change coin”: causes - effects

• Mitigation: action directed at addressing causes of CC

(long-term)

• Adaptation: action directed at coping with CC impacts

(short-medium-long term);

• requires understanding of impacts, which vary considerably by type of

extreme event, region, environment, sector etc.

Transport:

• much of international debate/policy action focuses on climate

change mitigation (i.e. reduction / control of GHG emissions)

• relatively little focus on study of impacts and development of

adaptation policies/actions

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UNCTAD: UN system focal point on trade and development

Long tradition in [maritime] transport (e.g. Review of Maritime Transport) Since 2008, integration of environmental and climate change considerations into work on transportation

• UNCTAD Expert Meeting “Maritime Transport and the climate

change challenge” (16-18 Feb. 2009)

• Joint UNECE-UNCTAD Workshop: “Climate change impacts on

international transport networks” (8 Sept. 2010)

• UNCTAD Ad Hoc Expert Meeting “Climate change impacts and

adaptation: a challenge for global ports” (29-30 Sept. 2011)

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CC Mitigation: the case for CO2 emissions control in shipping

• More than 80% of global trade in goods (volume) carried by sea
• International shipping: ~ 3% of global CO2 emissions from fuel

combustion; most energy efficient mode of transport However

• Emissions from international shipping are rising - to increase by

factor of 2.4 - 3 by 2050 (IMO, 2nd GHG Study 2009)

• Shipping heavily reliant on fuel oil for propulsion
• Emissions from international shipping not covered by Kyoto Protocol:

negotiations on future emissions regime underway at IMO and UNFCCC

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Substantive deliberations on CO2 emissions regulation at IMO: status quo

Technical and operational measures, in particular

• Energy Efficiency Design Index (EEDI) for new ships
• Ship Energy Efficiency Management Plan (SEEMP)
• Energy Efficiency Operational Indicator (EEOI)

Package of measures adopted in July 2011 (by majority)

• amendments to MARPOL, Annex VI

Market-based instruments:

• Issue continues to be highly controversial

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CO2 Emissions control in maritime transport: industry measures, e.g.

• Slow steaming (N.B. nexus – climate change, energy supply

and economic crisis)

See e.g. H. Haralambides, Erasmus University Rotterdam, On Containing CO2 Emissions in International Ocean Transportation: Some thoughts on the Case of Slow-Steaming (UNECE- UNCTAD workshop presentation)

• Focus on Engines, Propellers, Appendages, Coatings

See e.g P. Gunton, Lloyd’s Register/Fairplay, Controlling GHGs: For Love or Money? (UNCTAD Expert meeting 2009 presentation)

• “Sustainable shipping initiative”

See www.forumforthefuture.org

• “World Ports Climate Initiative”

See e.g. S. Inoue, IAPH, Climate Initiatives of the Worlds Ports, (UNCTAD Expert meeting 2009 presentation)

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Climate change impacts and adaptation: the case for action

Climate change/extreme events likely to have direct and indirect

impacts on (maritime) transport and related infrastructure, which have so far received little attention Sea-level rise, temperature and precipitation changes, more frequent/intensive storms, floods, etc. predicted to

• affect ports and coastal infrastructure, hinterland transport and

the broader supply-chain

• affect demand for shipping/transport costs/global production

locations

• open new arctic sea-lanes due to polar ice melting

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Climate change impacts and adaptation: the case for action Some illustration

US Gulf Coast study

Ports and other infrastructure assets at risk along the US Gulf coast (US Gulf Coast Study (Savonis 2009))

Flood risk at US Gulf coast under sea level rise 0-6-1.2 m (MSL + storm surge). Relative sea level rise of ~1.2 m (4 feet) could permanently inundate more than 2400 miles of roads,

• ver 70% of the existing port

facilities, 9% of the railway lines and 3 airports.

US Gulf Coast study

Ports Roads

In the case of a ~5.4-7 m storm surge, more than 50% of interstate and arterial roads, 98% of port facilities, 33% of railways and 22 airports in the US Gulf coast would be affected (CCSP, 2008).

US Gulf Coast study

29 Sources: NASA 2010, http://earthobservatory.nasa.gov/NaturalHazards/view.php?id=45177 From: Pascal.Peduzzi, UNEP GRID Europe (2010). UNECE-UNCTAD Workshop presentation.

2010 Pakistan flood: unusually intense monsoon rains

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Source(s): MapAction; United Nations Office for the Coordination of Humanitarian Affairs (OCHA) From: Pascal Peduzzi, UNEP GRID Europe (2010). UNECE-UNCTAD Workshop presentation.

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Fig: Pascal.Peduzzi, UNEP GRID Europe (2010) UNECE-UNCTAD Workshop presentation.

32 Figure: Ulrich Ebel, Swiss Re (2010) UNECE-UNCTAD Workshop presentation.

Swiss Re Studies on Climate Change Effects

33 Figure: Ulrich Ebel, Swiss Re (2010) UNECE-UNCTAD Workshop presentation

Change in annual expected loss from storm surge

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The special case of ports: gateways to global markets OECD study (Nicholls et. al, 2007)

• Exposure of 136 port megacities to coastal flooding

(population/assets) in 2005

• Estimated asset exposure: USD 3 trillion

Allianz/WWF study (Lenton et.al, 2009) http://knowledge.allianz.com

• Assuming SLR of 0.5 m by 2050 (tipping scenario)…
• Estimated asset exposure in same 136 port megacities:

USD 28 trillion

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Top 20 port cities with highest increase in exposed assets under tipping scenario (US$ billion) by 2050

Source: rce: Lento ton et.a .al.

• l. 2009

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UNCTAD Expert Meeting “Maritime Transport and the Climate Change Challenge” Geneva, 16-18 February 2009

• 180 expert delegates from 60 countries, with broad range of backgrounds
• IGOs and NGOs (including IMO, UNFCCC, World Bank, WMO, OECD/ITF,

ISO, UNEP, IEA, FAO, UNIDO, WTO, UNDP, UNECE, IOPC)

• Representatives from the international shipping and port industries

(including IAPH, ICS, INTERTANKO) Integrated discussions on

• GHG emissions and climate change mitigation options
• Potential impacts on maritime transport supply-chains
• Adaptation requirements and broader economic, social and developmental

implications

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Key Points in Chair’s Summary and Conclusions: Mitigation

Time frame real concern:

• According to IEA, unless decisive policy action is taken within 18-24

months (including investment decisions to lock in technology), “manageable” CO2 atmospheric concentrations (450 ppm CO2 equivalent and 550 ppm CO2 equivalent) cannot be achieved

• GHG emissions from shipping are projected to increase, unless

effective regulatory, technical and operational measures are negotiated, agreed and implemented without delay

• Negotiations towards regulation of CO2 emissions from international

shipping should be pursued with all due speed

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• So far insufficient attention paid to potential devastating impacts
• n transportation systems, in particular, ports – key nodes in the

supply-chain

• Given the potential impacts/implications – maritime transport

should be seen much less as a culprit than as a potential victim

• Increased focus on responding to the challenge important for

the long-term prospects of the maritime transport sector/global trade

Key Points in Chair’s Summary and Conclusions: Impacts and adaptation [1]

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Impacts and adaptation [2]

Experts called for further/increased – appropriately-funded scientific research – targeted vulnerability studies for ports and coastal transport infrastructure – cooperation (scientists, engineers, industry, international

• rganizations and policy makers)

to ensure that up-to-date information on climate change impacts and adaptation measures is available, widely disseminated, and is taken into account by policy makers, transportation planners and development strategists Plan and prepare for already-predicted impacts

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Adequate funding paramount for effective adaptation

• Important to explore ways to generate the necessary financial

resources

• Consider reinvesting proceeds from financial instruments

related to mitigation of maritime transport GHG emissions within the industry for the purpose of effective adaptation, particularly in developing countries – (N.B. ICS statement at UNCTAD Ad Hoc EM 29.9.2011)

• Important to take advantage of existing technology and develop

new technologies. For developing countries, it is crucial to access/benefit from such technology

Impacts and adaptation [3]

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Recent Initiatives by Global Port Industry

IAPH Resolution adopted in May 2009: to expand work under “World Ports Climate Initiative” to cover impacts and adaptation IAPH/AAPA/Stanford University: Global Survey of Ports “Impacts of Climate Change on Seaports” (2009)

• 81% of respondents consider CC may have serious implications
• 31 % of respondents feel sufficiently informed about risks/costs

IAPH commissioned study on “Seaports and Climate Change - An Analysis of Adaptation Measures”, 2010”

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Joint UNECE-UNCTAD Workshop “Climate Change Impacts on International Transport Networks”, Geneva, 8 September 2010

• Focus of workshop: integrated consideration of impacts and adaptation for

transports systems along international supply-chains: all modes Follow-up 2011:

• UNECE “Group of Experts on Climate Change impacts and adaptation for

International Transport Networks”

http://www.unece.org/trans/main/wp5/wp5_ge3_02.html See in particular “Climate Change: an overview of the scientific background and potential impacts affecting transport infrastructure and networks (Draft Report)”

http://www.unece.org/fileadmin/DAM/trans/doc/2011/wp5/2nd_session_EG_on_Climate_Change_inf-doc-no2.pdf

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UNCTAD Ad Hoc Expert Meeting: “Climate change impacts and adaptation: a challenge for global ports” Geneva 29-30 September 2011 Wide range of experts (policy makers, port planners, scientists and

engineers, international organizations, global port and shipping industry (IAPH, ICS) share their insights and discuss relevant issues with a view to identifying:

• Vulnerabilities and risks
• Associated adaptation requirements
• Existing best practices, information and data sources
• Issues requiring further study, including data requirements
• Partners and mechanisms for effective collaboration

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Main messages

• Need for more awareness-raising about the complex implications of CC

for ports and related transport networks, hinterland connections and (adjacent) cities;

• Bridging the gap between science and policy is crucial. Requires

collaboration and dialogue between all stakeholders (scientists/transport industry/insurance sector/financial and lending institutions/policymakers and governments);

• Availability and efficient dissemination of timely, more tailored

information and data important;

• Further research and analytical work is needed
• targeted case studies, in particular for the purposes of risk assessment
• Identify best practices
• develop guidance, checklists, and other tools in support of adaptation in ports

See further: “Main outcomes and Summary of Discussions” UNCTAD/DTL/TLB/2011/3

Thank You!

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See www.unctad.org/ttl/legal for information/documentation/presentations

UNCTAD Expert Meeting 2009 Summary of the proceedings (UNCTAD/DTL/TLB/2009/1) UNECE-UNCTAD Workshop 2010 UNCTAD Ad Hoc Expert Meeting 2011 Main outcomes and Summary of Discussions (UNCTAD/DTL/TLB/2011/3) UNCTAD Oil Prices and Maritime Freight Rates: An Empirical Investigation (UNCTAD/DTL/TLB/2009/2) www.unctad.org/ttl/legal Forthcoming: UNCTAD (ed.) Maritime Transport and the Climate Change Challenge, Earthscan, March 2012 (approx. 350 pp). On UNECE Expert Group on CC Impacts and Adaptation for International Transport Networks, see http://www.unece.org/trans/main/wp5/wp5_ge3_02.html On developments at IMO see www.imo.org On vessel efficiency, see also http://www.shippingefficiency.org