What would a Paris climate deal mean for the shipping and aviation industries?

Madeleine Cuff

How will the outcome of Paris affect two of the world economy's most important sectors, shipping and aviation?

Shipping and aviation, the two powerhouses of globalisation, bring trade, wealth and development to the remotest corners of the world. But in return they demand a hefty environmental price.

Aviation currently accounts for about two per cent of the world's greenhouse gas emissions, according to its regulatory body, the International Civil Aviation Organistation (ICAO). Left unchecked, the ICAO estimates this figure could grow by almost 400 per cent by 2050. Meanwhile, international shipping similarly currently accounts for just over two per cent of global CO2 emissions and emissions are likely to grow anywhere from 50 per cent to 250 per cent by 2050, according to a UN-backed study released last year.

Regulation of these sectors has become something of a bureaucratic headache for climate negotiators. As international industries, they are not easily covered by national or regional decarbonisation policies, but nor are they covered under international climate agreements.

During the 1997 Kyoto summit, the issue of regulating shipping and aviation proved too much of a sticking point for negotiators, who opted to leave it out of the final agreement. Since then, regulation has been the responsibility of UN-backed industry bodies ICAO and the International Maritime Organisation (IMO). However, progress has been slow. Since 1997 only a handful of measures have been introduced by ICAO or IMO to address the sectors' emissions.

In shipping, new ship efficiency standards adopted in 2011 required all new vessels to meet the Energy Efficiency Design Index (EEDI), but new ships are already well exceeding the required standards. The IMO says it is also planning to develop a global data collection system to monitor ship emissions, with an announcement detailing how this system will work expected at the next assembly in 2016. However, it continues to resist calls for an overall emissions reductions target, most recently rejecting a proposal for an emissions cap made in May by the Marshall Islands.

Meanwhile, talks at the ICAO have only produced a series of voluntary commitments from the aviation industry and a target for "carbon neutral growth" by 2020. The ICAO has so far failed to set out how exactly it plans to achieve this - although it is expected to release more details about the scheme next year.

Many observers remain decidedly unimpressed. "There's no evidence at all yet that the ICAO exercise is anything other than greenwash," says Tristan Smith, a lecturer in energy and transport at University College London (UCL). "Similarly the IMO... needs to demonstrate how policies that have been put in place are going to create genuine absolute emissions reductions. They haven't demonstrated that at all."

The industries' enthusiasm for tackling carbon emissions seems to come in waves, mirroring the cycle of UNFCCC negotiations, according to Tim Johnson, director of the Aviation Environment Federation. "Whenever you get a big meeting - like in Copenhagen - and everyone's talking about climate change and how to get it under control, I think both ICAO and the industry feel the need to act and show their leadership role," he says.

With the next big international climate summit in Paris now just a few months away, the ICAO and the IMO both seem to be "really engaged" with finalising their emissions plans, Johnson says. But how do the industries feel about the prospect of a new international climate deal and how would it impact them?

The latest version of the UN's draft text calls on shipping and aviation industries to limit their emissions in line with internationally agreed targets. This appears relatively uncontroversial at first look. It simply requires the two industries to follow the lead set by UNFCCC - something they are likely to do already, according to James Beard, a policy officer at WWF's Energy and Climate unit. In many ways, the ICAO takes its cue from UNFCCC, he says. "It's not going to want to be doing more than them, but it's also not going to want to be doing a lot less than them either," he predicts. Likewise, the clause could give the IMO a very clear mandate to act on shipping emissions, argues Smith, perhaps acting as a catalyst for the IMO to set tangible emission reduction targets.

However, exactly how these emissions reductions might be delivered is a bone of contention. Although the Paris text seems relatively relaxed about the issue, it is the subject of fierce debate within the industry.

Aviation is broadly welcoming of a market-based measure in principle, and in particular is reportedly exploring a global carbon offsetting programme as a means of achieving its goal of carbon-neutral growth by 2020. However, carbon offsetting schemes are difficult and costly to enforce, and the ICAO's scheme may not even be legally binding or universally applied, leading some green campaigners to voice concerns over the plans.

As for aviation's longer-term decarbonisation ambitions, it is placing a lot of faith in efficiency measures and biofuels. And although the IPCC predicts the aviation industry can improve aircraft efficiency by up to 50 per cent by 2050, it says it is unlikely that any practical alternative to kerosene-based jet fuels will be found within the next few decades. Land resource is also major issue - the UK's Committee on Climate Change says that "competing claims for scarce bio-energy resource means policy should not be planned on the basis of significant penetration of biofuels in aviation".

Meanwhile, the shipping industry is largely opposed to a market-based measure for limiting its emissions. Many within the sector insist efforts to reduce emissions should be limited to efficiency measures and voluntary fuel emissions savings, claiming that this already gives ship owners the most powerful incentives to minimise their carbon impact.

"It's easy to be trite about these things but it's really a case of enlightened self-interest," says Simon Bennett, director of policy and external relations at the International Chamber of Shipping. "The important thing to understand about the shipping industry is that fuel costs by far are the most significant cost that a ship operator has. So ship operators have every interest in reducing the fuel consumption of a ship as much as possible."

In an attempt to limit their costs, many ships have already adopted the practice of "slow steaming" - where ships travel at lower speeds to save on fuel. This partly explains why emissions from shipping have actually fallen in recent years, Bennett says. And although some campaigners say slow steaming is a temporary trend, Bennett believes it is here to stay - partly because new regulations mean ships will have to switch to a more expensive, low-sulphur fuel from 2020.

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