What impact will COP26 have on the shipping industry?


C.OP26 – the UN Climate Change Conference – took place in Scotland in October / November 2021. Some observers, including many environmental lobbyists, said that overall it had not been possible to set sustainable climate targets. From our perspective here at ParrisWhittaker, a leading shipping law firm in the Bahamas, it was remarkable that shipping was high on the agenda at COP26.

Many commentators in the shipping industry believe that the initiatives at both COP26 and the subsequent IMO Marine Environment Protection Committee (MEPC) in London do not go far enough. Whether or not they do, we believe the announcements made and initiatives taken will ultimately have a significant impact on all stakeholders, large and small, operating in the global maritime sector. Here we look at the reasons why the shipping industry is being forced to review its current practices and review them in the context of global warming. We are also examining some of the measures that the international community signed up to at COP26.

The shipping industry and COP26: why does it matter?

Fundamentally, the world’s oceans and coastal communities are being seriously endangered by the increase in CO2 emissions. The fourth greenhouse gas study by the International Maritime Organization (IMO) in 2020 paints a clear picture of the effects of the shipping industry:

Shipping activities now contribute almost 3% to global greenhouse gas (GHG) emissions

Between 2012 and 2018, CO2 emissions from the shipping industry rose by 40 million tonnes, or 5.6%

By 2050, emissions are expected to rise to 90 to 130% of the 2008 level

What happened at COP26?

The main developments that will affect the maritime sector at the climate conference include:

14 nations signed the declaration on emission-free shipping by 2050. This document, along with a number of commitments, recognizes that climate change is a global crisis that requires efforts from all parts of the international shipping sector throughout the world fleet

The phasing down of coal and fossil fuels and a commitment to reduce methane emissions. For the shipping industry, these commitments are likely to fuel renewed interest in LNG, LPG, methanol and other alternative fuel sources. With this in mind, the Clydebank Declaration signed by 20 countries

COP26 recognized:

“… the need to form an international coalition of ambitious governments to act together to show that decarbonising maritime shipping is possible while unlocking new business opportunities and socio-economic benefits for communities around the world.”

The signatories of the declaration support the establishment of green shipping corridors – emission-free sea routes between two (or more) ports.

The Just Transition Maritime Task Force was also set up during COP26. It aims to assist crew members and other seafarers and coastal communities in making the transition to alternative energies in the maritime sector

What is the position of the IMO?

Just a week after COP26, the IMO held its Marine Environment Protection Committee (MEPC) meeting in London. The event was an early opportunity to reaffirm some of the commitments made by IMO members at COP26. However, according to some environmentalists, the MEPC turned out to be a disappointment.

Yes, it recognized the “urgent” need to strengthen the sector’s ambition in its strategy to halve greenhouse gas emissions by 2050. But several of the nations with the world’s largest share of the shipping sector opposed the 2050 target. These countries included Brazil, China, Russia, and Saudi Arabia. A resolution to introduce the zero emissions target by 2050 was only supported by a minority of the member states. Significantly, several EU countries that actually supported the zero emissions target at COP26 did not support this similar resolution at MEPC.

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As experienced shipping and maritime attorneys, we believe that doing nothing is no longer an option for the shipping industry. COP26 was an opportunity to make progress in defining future strategies for key players in the sector. But the steps that have been taken must be built upon. If there is no consensus within the industry on how to go further, it is now clear that governments will act unilaterally to restrict and control shipping, especially if it appears that the industry is not doing so in controlling emissions, as it should.

Aside from the politics of the issue, there is also a real financial risk for shipowners and others. It is entirely possible that investors and financial institutions will abandon companies that are not on the road to zero carbon emissions.
Source: By ParrisWhittaker – Jacy Whittaker and A. Kenra Parris-Whittaker

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