Presentation in APPAM

Policy Adjustment and Coordination for Equal CO2 Mitigation Cost Sharing

in the International Shipping

By Haifeng WangCollege of Earth, Marine, and Environment

[email protected]

College of Earth, Marine, and Environment

mailto:[email protected]

College or Department name here 2

Background

• Ships emitted about 1067 million metric tons of CO2 in 2007– This is 3.3% of total CO2 emissions

– The sixth largest if ship industry were a country, exceeding Germany

• Policy options have been developed and discussed under International Maritime Organization (IMO)– The Marine Environmental Protection Committee （ MEPC)

• The first MEPC meeting targeting at CO2 was in 1996

• The latest: MEPC 59 in July, 2009• The Updated 2000 IMO GHG Study

• The Kyoto Protocol: Shipping Emissions to IMO and Aviation Emissions to ICAO

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1970 1975 1980 1985 1990 1995 2000 2005 2010

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Freight-energy Trend Gunner, October 2007Freight-energy Trend Corbett and Köhler, JGR, 2003Freight-energy Trend Eyring et al., JGR, 2005Int'l Marine Bunker Sales (IEA 2006)Point Estimates from Existing StudiesTrade in billion tonne miles

From Corbett and Winebrake, 2008


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1990 2000 2010 2020 2030 2040 2050 2060

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Background: Policy Options

• The recent debate in MEPC (March, 2009, July, 2009)– Available Policy instruments:

• Emission Trade System (open and closed ETS)• International Compensation Fund (ICF)• Energy Efficiency Design Index (EEDI)• Energy Efficiency Operational Index (EEOI)• Ship Energy Management Plan (SEMP)

– Interim and voluntary package under IMO to reduce vessel-source emissions

• Voluntary EEDI and EEOI• No binding commitment to reduce emissions• To be discussed in MEPC 60 in March, 2010College of Earth, Marine, and

Environment

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Background: Legal Debate

• Common but Differentiated Responsibility (CBDR) vs Equal Treatment for All Ships– Developing countries:

• The fuel consumption from ships should be deemed as “Survival Emissions”

• Developed countries should be responsible for most emissions emitted by ships

– Developed countries: • Equal treatment is the principle of IMO itself• Most registered fleets have been already in

developing countries (Flag of Convenience)


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Climate Policy After Kyoto

• Who will take the lead in Ship-based GHG reduction after Kyoto?– International Maritime Organization or– A universal GHG reduction regime

• What will happen in next MEPC meeting in IMO– London, March, 2010– Some stakeholders are not content with the progress in

IMO– EU threatened to act alone if IMO failed to regulate– Voluntary approach may not reduce enough GHG


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Aim of this research

• Calculates the cost for CO2 reduction policies.

• Computes the reduction cost impact on the global trade

• Discusses the policy coordination and cooperation among different International organizations


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Methodology• Activity-based method to estimate the CO2 emissions for

Annex I and non Annex I countries– Identify all targeted ships– Calculate their annual fuel consumption based on

engineering models– Estimate the CO2 emissions from those ships

– Calibrate the ratio between CO2 reduction cost and trade cost based on Trade, Ship empirical movement, Ship parameters, and origin-destination Pairs (TSSP)

• Limit the research in North America


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Environment


Environment

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• Key Assumption: To achieve 20% CO2 reduction, the mitigation cost is between $0-120 per ton.


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Data

• Trade, Ship empirical movement, Ship parameters, and origin-destination Pairs (TSSP)– Trade: Import Waterborne Data Bank– Ship Empirical Movement: Entrances and Clearances by

Army Corps of Engineering– Ship Parameters: Lloyds shipment register dataset– Origin-Destination Pairs: Entrances and Clearances by

Army Corps of Engineering• Distances between ports: On-line Port2Port Calculators



Environment

0

10000

20000

30000

40000

50000

Developing Countries Annex I (Excluding Transition Economies)

Transition Economies

Voyages Average Power (KWH)

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Results


Non-Annex I

Annex I (Excluding

Transition Econ)

Transition

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The CO2 emissions and costs of some major Non-Annex I countries and maritime states


Country CO2 Emissions (Million Tons) Cost of CO2 Emissions (Million $)

China* 1.37 163.99

India 0.29 35.38

Brazil 0.025 3.04

Russia 0.19 23.33

Panama 14.81 1777.00

Liberia 9.13 109.51

Bahamas 8.04 964.46

Marshall Islands 3.63 436.04

* Exclude fleets registered in Taiwan but include fleets registered in Hong Kong and Macao

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Countries with highest CO2 cost/import value rate


Country Annex I CO2 Reduction Cost/Value

US Virgin Is* No 462 Tonga No 22.2 American Samoa No 11.9 Cayman Isl* No 9.39 Gibraltar* No 8.32 British Indian Ocean Territory* No 7.58 French Guiana* No 5.80 Antigua No 2.66 Kiribati No 1.58 Faroe* No 1.20

*Countries or territories are not non-Annex I either

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Policy Implications

• Small countries are losers in CO2 reduction policies

– Highest CO2 reduction/trade value ratio

– Diseconomy of scale

• They are victims of global warming too– Sea level rise– Climate change

• That means policy cooperation and coordination among countries and international organizations


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Policy Cooperation and Coordination

• International Maritime Organization– CBDR:

• Countries have to reduce the emissions• The payment is collected by an supervisory body• Rebate the cost back to small developing countries

• World Trade Organization– Special Tariff reduction– Special treatment for small developing countries

• Environmental Exception for ships?



Environment

Thank You谢谢

Thoughts or Comments?

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Presentation in APPAM