The International Maritime Organization agreed Friday on its first ambitious strategy to reduce greenhouse gas emissions in the international shipping sector to meet the Paris Agreement goals. The agreement benefited from input and analysis from the International Energy Agency, specifically being in line with projections from the IEA’s Beyond 2°C Scenario (B2DS).
The IMO strategy includes a target to reduce carbon emission by at least 50% compared with 2008 levels by 2050. This strategy will have far-reaching consequences for a sector that has traditionally faced significant barriers to innovations.
To meet this target, the shipping industry will need to optimize maritime trade operations and capacity utilization, improve energy efficiency much faster than it has done to date, and transition towards low and zero-carbon fuels. The IMO is the United Nations regulatory agency for the maritime industry.
The IEA participated in the IMO Intersessional Working Group on greenhouse gas emissions tasked with negotiating and writing the Initial IMO GHG Strategy, representing the OECD delegation together with the International Transport Forum. The IEA contributed to the activities of the group, outlining the result of the B2DS scenario that was developed in the Energy Technology Perspectives 2017 report.
The target of at least 50% emission reductions by 2050 is in line with the results of the IEA B2DS (reaching a 50% reduction in the 2050 to 2060 framework). It is closely aligned to the proposal from Japan, proposing a target of 50% emissions reduction by 2060, relying on the IEA analysis. And it was adapted as a compromise solution between a group of European countries and Pacific island states, aiming for a 70-100% reduction target, and a group of countries emphasizing that it is less urgent and feasible to adopt an absolute GHG reduction target at this time.
The adoption of the IMO Strategy will have a large impact on the international shipping sector’s contribution to global greenhouse gas emissions. According to IEA statistics, the international shipping sector is currently responsible for about 5% of global oil demand, similar to the combined demand for oil from Germany, France and the United Kingdom. The international shipping industry also accounts for about 2% of global carbon dioxide emissions, a share that is currently larger than international aviation. Without this agreement, shipping emissions would keep increasing in a stark contrast with expected improvements from other sectors.
Meeting the ambition of the IMO Strategy does not come without challenges. IEA analysis pointed out that this would not be possible without substantive policy support. The Initial IMO Strategy contains an indicative list of “candidate short-, mid- and long-term measures”, but still needs to determine which measures will actually be implemented.
The IEA analysis outlined in the OECD submission to the IMO Intersessional Working Group on GHG emissions of September 2017 emphasized the need to adopt enhanced efficiency standards (including a revision of the ambition of the current Energy Efficiency Design Index), stimulate investments for retrofits and the adoption of efficient operational practices with the introduction of an operational efficiency standard. In addition, the IEA pointed out the need to develop a mechanism enabling the adoption of a CO2 price for shipping fuel and a policy framework – such a low-carbon emission standard – allowing to reduce the overall carbon intensity of shipping fuels.
Taking action in future work of the IMO to ensure that the Strategy is supported by adequate implementing measures will be crucial to ensure that shipping emissions can be effectively reduced, ensuring that this important first step for “a pathway of CO2 emissions reduction consistent with the Paris Agreement temperature goals” is achieved. The IEA is ready to continue to engage in this process and support these important developments with additional analytical inputs.