What's happening in Mediterranean & Africa



Decarbonisation: Industry still weak-kneed in face of hostile environmental lobbies and pro-tax bureaucrats

It comes as no surprise to learn that the debate on "decarbonisation" of shipping has only one socially acceptable side. It's the way of so many public debates these days.

What is more surprising is that the big companies are sounding as socially acceptable as partisan environmentalists, when one would have thought they would oppose costs that did not benefit shareholders.

But shipping lines are even devoid of objections to the lemming-like rush towards to greater regulation in what looks like a children's crusade led by Greta Thunberg under such scarifying names as "Climate Emergency".

Cui bono - who benefits from such an unexpected corporate posture? While smaller concerns scream in pain over skyrocketing environmental compliance costs, the top 10 take it in their stride, often insisting on strict enforcement. Banks know they are good for money lent, so meeting the compliance costs is no problem for big business. Meanwhile, struggling smaller concerns are put out of business with market share going to the bigger fish.

But what is the core problem that justifies demands for decarbonisation? Which, if carried out fully, will lead to the end of fossil fuel use. Ask Google for the harm done by CO2, and you get this:

"A high concentration can displace oxygen in the air. If less oxygen is available to breathe, symptoms such as rapid breathing, rapid heart rate, clumsiness, emotional upsets and fatigue can result. As less oxygen becomes available, nausea and vomiting, collapse, convulsions, coma and death can occur."

But is that a problem? A "climate emergency"? It sounds about as serious as the risk to old men of fatal heart attacks from having to climb broken escalators, or injuries caused by the lack of seat belts on buses. Such things do happen, but rarely. Certainly not often enough to impose drastic measures to prevent their occurrence.

Googling deeper, one is less impressed - finding less and less - at last one finds: "The major threat from increased CO2 is the greenhouse effect. As a greenhouse gas, excessive CO2 creates a cover that traps the sun's heat energy in the atmospheric bubble, warming the planet and the oceans. An increase in CO2 plays havoc with the earth's climates by causing changes in weather patterns."

Is this a justification for banning fossil fuels? The main threat, by this account, seems to be a possible "change in weather patterns" with no indication whether these changes would be good or bad.

There is nothing to back New York Democratic Congresswoman Alexandria Ocasio-Cortez's claim "world is going to end in 12 years if we don't address climate change". She's since backed down on that, blaming Republicans for "taking her literally" when caught out by fact checkers.

Based on such slender evidence, shipping's global regulator, the UN's International Maritime Organisation, aims to seal a deal to cut carbon dioxide emissions this decade which would keep alive the possibility of a  "transformational international pollution tax" on the industry.

But is there any need? Given that the stakes are high for shipping companies that have striven to drive down costs, with decarbonisation estimated to cost trillions of dollars, does it not make sense to establish the actual threat and a degree of that threat before taking action.

Delegates from 174 countries plus a host of industry observers at the IMO have agreed on measures to reduce the global fleet's carbon intensity by 40 per cent by 2030 compared with 2008 levels. One asks on what basis?

The real importance of the meeting, in the view of officials, hinges on whether the member states can emerge without divisions on climate change that would make an agreement on a carbon tax on international shipping an even more formidable challenge.

"Adoption of actual short-term measures is another critical factor," said IMO secretary-general Kitack Lim. "Without this one, we cannot develop our further ambitions by 2023."

But from where do such imperatives spring? The shipping sector doesn't question where such measures are necessary. There seems to be no reason other than the venal one, as to why shipping majors are so keen to play along, except to say they would rather have a global tax than a patchwork of regional taxes  - that's  Gary Gilmore's choice of being shot rather than hanged.

"The worst thing for the global shipping industry is to have a patchwork of regional schemes," said Anne Steffensen, chief executive of Danish Shipping, a trade body.

Returning to who benefits from the rigorous enforcement of decarbonisation rules, they are Maersk, which ships 4,145,367 TEU a year; Mediterranean Shipping Co (MSC), which ships 4,016,237 TEU annually; CMA CGM with 3,005,765 TEU, Cosco with 3,003,456 TEU; Hapag-Lloyd with 1,783,928 TEU; Ocean Network Express (ONE) with 1,567,358 TEU and Evergreen with 1,353,167 TEU per annum. There used to be 20 major container lines 10 years ago, now there are 10, a number most expect to shrink in years to come.

In the end member states, influenced by shipping lobbies, agreed on a two per cent annual reduction in carbon emissions for ships between 2023 and 2026.

Predictably, environmental groups have denounced these measures as  "underwhelming and verging on inconsequential , reported London's Financial Times. One European delegation adviser said the carbon intensity requirement was a "paper tiger" with a lack of an enforcement mechanism.

In the absence hostile former US president Donald Trump the United States has returned to the global warming fold with the return of a progressive Democratic administration, bolstering the coalition of EU states and Pacific Islands pushing for more aggressive CO2 policing.

The Marshall Islands (pop 59,000) and the Solomon Islands (pop 670,000) have put forward the only proposal for a meaningful financial incentive to decarbonise shipping at US$100 per CO2 tonne. according to the FT report. The Marshall Islands is emblematic of the tensions, being low-lying and at risk from global warming.

"If we look at IMO as a huge ship, then we have to start turning now from the iceberg ahead," said Albon Ishoda, a delegate from the Marshall Islands. "If we're allowed to have a transformational discussion, then that would drive progress on the ground."

But such an approach also opens up the risk of a "failure to decide anything", in the words of one European delegate.

Mr Lim, the IMO chief, said that the key to avoiding a confrontation over a tax was in how the money raised would be used.

Shipping groups are likely to also stake their claim on the money. "If it goes into general government funds, then in the end those costs will be passed on," said Rolf Habben Jansen, chief executive of Hapag-Lloyd.

Ultimately, the industry increasingly fears its influence over regulation could be slipping away and risks being branded a laggard on climate change.

Which is a legitimate fear if the industry fails to question the basics of climate change and make legitimate objections known to the world through aggressive public relations and support from a sympathetic shipping press.

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If one believes fears of climate change are overblown, should this be known to the wider world, or should the industry to continue to go along to get along?

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Mediterranean & Africa
Trade Specialists