Market Based Measures for the Reduction of

Greenhouse Gas Emissions from Shipping

There are currently a number of MBM proposals on the table, namely the Danish Bunker Contribution (Fund) Proposal, the Emissions Trading Scheme proposed by Norway, Germany, France and the UK, and a number of other proposals that would factor in technical and operational measures.  The US has proposed a variation on the emissions trading concept that would involve vessels earning and trading energy efficiency credits, which would be calculated in the same way as the EEDI but using actual ship activity (i.e. capacity x tonne miles) over a given period.  Japan and the World Shipping Council have proposed a scheme that would “piggy back” on the Fund proposal and involve “efficient” vessels being able to claim refunds on their Fund contributions on the basis of their EEDI score (this for existing, as well as new ships). 

The Bahamas have proposed what might be termed a “non-MBM”, proposing a scheme whereby vessels would be required to measure emissions over a given period and then use technical and operational means to reduce their emissions by a given amount, such as 20%, within a set timescale.      

An intersessional working group met in the Spring of 2011 charged with examining:

• The need and purpose of market based measures in the reduction of Greenhouse Gas emissions from shipping

• The extent to which the various proposals are in accordance with the principles of relevant conventions such as UNFCCC and the Kyoto Protocol, World Trade Organisation etc.

The group was also asked to group the various proposals according to the type of reduction measure they use (e.g. in sector and in and out of sector), identify the strengths and weakness of the groups identified and assess them against a variety of criteria, including feasibility, environmental effectiveness and economic burden and operational impact for the shipping industry.

In the event politics took over once more and it proved extremely difficult for agreement to be reached even on the first issue, i.e. the need and purpose of an MBM.  Representatives of the developed world were of the opinion that an MBM is necessary and will achieve the stated goal of reducing emissions, while the developing countries, led by China, India, Brazil and South Africa, once again expressed concern that an MBM would disadvantage poorer countries and called for further analysis of the impact that Market Based Measures would have on the international trade, economy and development of developing countries, as well as the sustainable development of international shipping.

Discussions will continue at the sixty third session of the Marine Environment Protection Committee in March 2012.