IMO regularly comes in for criticism from many quarters but I had not heard an argument made for it to be sidelined so that market forces could dictate the pace of change in environmental legislation. But that appeared to be what Michael Parker, chairman of the Global Maritime Forum (GMF), was saying during a webinar at the end of October (29 October).
He was speaking during an event to discuss how shipping’s environmental footprint could be reduced, which formed part of the ‘Posidonia Webinar Week’ and was hosted by that event’s organiser.
He made it clear that he was not speaking on behalf of the GMF but his views will surely influence his advice and guidance for that group and in his day job as chairman of global shipping, logistics and offshore at Citibank, so his views carry some weight.
It is “the supply chain” – of which shipping is just one component – that will drive the emissions reduction agenda in the future, he said. In that context, shipping “will look a lot better when you put it against trucking and the other parts of that supply chain.” So he welcomed the Sea Cargo Charter, which was launched on 7 October by dry bulk charterers to establish “a common baseline to quantitatively assess and disclose whether shipping activities are aligned with adopted climate goals.”
That group says its goals are in alignment with IMO’s policies and ambitions but Mr Parker clearly sees such industry initiatives as indicators of an opening gap between industry and regulators. “To the extent that regulation catches up with what players in the industry are doing, that doesn’t really matter,” he said.
The GMF has already welcomed the Sea Cargo Charter, saying on its website that it will bring “improved decision making in line with United Nations decarbonisation targets”, but Mr Parker predicted that private sector initiatives such as this and the GMF itself “will really help drive this faster [and] I don’t see any problem with that.”
He spoke of what he sees as “parallel cooperative processes” between regulators and the industry although the industry will make faster progress towards reducing emissions “simply because shipping is serving society, it’s serving consumers and … in the end the consumer.”
I have left it a few days to comment on his remarks because I wanted time to reflect on the implications of what he said. I certainly find IMO frustrating at times, particularly over what I see as its lack of transparency – try getting hold of documents from its Intersessional Working Group on Reduction of GHG Emissions from Ships, which met the week before Mr Parker made his comments, for example – but I have no doubt that an international forum is the right place for an international sector such as shipping to be regulated.
Two concerns come to mind. One can be summed up in the phrase ‘marking its own homework’. There are certainly many excellent examples of self-regulation in the shipping sectors – OCIMF’s SIRE and TMSA schemes in the tanker sector come to mind – but if market forces and public opinion are to become our guide on emissions policy, who will set the marking scheme against which targets will be set and achievements measured?
My other concern is that this industry-focused approach has echoes of regional regulation, which we see especially in the EU and US and increasingly elsewhere. It turns out that Mr Parker is in favour of that, too.
Take Europe’s Emissions Trading Scheme (ETS), for example. In September, the European Parliament said that shipping should be included in its scope, which attracted criticism from shipowner organisations, such as Intercargo, which described it as “confirmation of how distanced the thinking of European decision-makers is from the global dimensions of the shipping sector.”
But Mr Parker, who said that the US might introduce a similar scheme, said that “we would be better working with regional schemes” and that “the private sector will help leverage” the funds they generate to direct them “towards the industries who need the R&D” such as “manufacturing equipment for the maritime sector”. In this way, the cost will come from society; “it won’t be paid for by the shipowner,” he said.
That comment was perhaps aimed at his fellow webinar panellist and ICS chairman Esben Poulsson, who had earlier reminded attendees of an ICS proposal announced last December to raise R&D funds for emissions reduction technologies by imposing a $2/tonne levy on bunkers. Europe’s ETS he said, “is a tax on industry and … will unfairly impact the global south.” It helped demonstrate a “clear message that the IMO system works much better than … regionally implemented schemes,” he went on.
It came as no surprise, then, that he responded during the webinar’s discussion session to Mr Parker’s comments, saying that he would not be in favour “of encouraging regional regulation to resolve this problem.” He agreed with Mr Parker that “the supply chain, including the charterers, will in the end have to pay” but he said that any money raised by such a scheme should be “ploughed back into the industry globally.” The ETS, he said, would simply fund Europe’s budget deficits.
I don’t know enough about the scheme to know whether its ambition really is as limited as that, but I share Mr Poulsson’s preference for an inclusive and global approach to making decisions such as this. I am naturally cautious of any programme that favours particular regions and am especially wary of a proposal that would seem to vest control with those who stand to benefit from it.
But what do you think? Is Michael Parker right to want the industry to plough its own furrow, alongside but distinct from IMO’s? Email me now with your views.