Q&A: The shipping industry climate goals backed – and blocked – by China
Anika Patel
07.14.23
Anika Patel
14.07.2023 | 1:35pmLast week, theInternational Maritime Organization(IMO) set newclimate goals for shipping, including a target of net-zero “by or around” 2050.
However, it did not agree on fuel standards or a shipping carbon levy, to help drive and pay for the transition.
China, seen as a key opponent of a levy, is a major player in the sector. It is home to the world’slargest shipping fleet,biggest and most numerous ports andlargest shipbuildingsector.
In a diplomatic memo circulated at the IMO talks and seen by Carbon Brief, China set out its concerns about “overly ambitious” climate goals for shipping and the potential impact of emissions reduction measures.
In particular, it opposed a levy on the carbon content of shipping fuels, arguing this would place a disproportionate burden on developing nations.
Instead, it called for more “practical” timelines, a trading scheme to encourage emissions cuts and a narrower scope of emissions included.
In this article, Carbon Brief looks at China’s role at the talks and its efforts to tackle shipping emissions.
- What was China’s role at the IMO talks?
- What was behind China’s position at the talks?
- Why was China worried about shipping costs?
- Is China doing anything to decarbonise shipping?
- What happens next for the IMO and climate?
What was China’s role at the IMO talks?
Talks at the IMO headquarters in London last weekagreeda new climate strategy for the world’s shipping sector, including a net-zero emissions target for the first time.
这笔交易还设置“指示性检查点”issions in 2030 and 2040, as well as a goal for at least 5% of shipping fuel to come from zero- or near-zero sources.
At the talks, however, China had opposed “unrealistic” proposals for shipping to reach net-zero emissions by 2050 “at the latest”, according to a diplomatic memo seen by Carbon Brief.
It had also opposed emissions interim targets for 2030 and 2040, shipping fuel carbon standards based on the full lifecycle from “well-to-wake” and a shipping carbon levy.
In place of “well-to-wake” fuel standards, which China argued would “transfer the national emissions reduction responsibility to international shipping”, it called for controls on the “actual emissions” from ships on a limited “tank-to-wake” basis.
Instead of aiming for net-zero by 2050 “at the latest”, China proposed the use of “flexible expressions” to frame the IMO’s ambition, such as net-zero emissions “around mid-century”, which it said was “more practical”. The deal, ultimately, aims for net-zero “by or around” 2050.
And, instead of a carbon levy, China proposed an “International Maritime Sustainable Fuels and Fund” (IMSF&F), noted Chinese shipping news outletEworldship. The IMSF&F would set emissions limits, with traded credits for over- or under-achievement and an alternative option to make payments into a “sustainable shipping fund”.
According toChinese consultancyXinde Haishi, China’s proposal would control emissions, but minimise administrative burdens and impacts on developing countries.
What was behind China’s position at the talks?
As the talks opened in London, foreign ministry spokesperson Wang Wenbinrespondedto questions on the memo at his regular press conference, saying China “highly values and actively supports IMO’s efforts to address climate change”. Wang said:
“[The] IMO should follow the principle ofcommon but differentiated responsibilities, take into consideration different national conditions, accommodate the legitimate concerns of developing countries, and promote the formulation of a fair and practical greenhouse gas (GHG) emission reduction strategy and relevant measures for the international shipping industry.”
China’s memo, previously reported by theFinancial TimesandReuters, warned that “overly ambitious” targets would harm global trade and “basic livelihood[s]”:
“An overly ambitious emission reduction target will seriously impede the sustainable development of international shipping, significantly increase the cost of the supply chain, and will adversely impede the recovery of the global economy and cause detrimental impacts to the basic livelihood of the people.”
国家控制的报纸Global Timesalso called attention to a phrase in the IMO’sstatementthat “we have to pay more attention to support developing countries”.
Yasiru Ranaraja, co-founder and director ofBelt & Road Initiative Sri Lanka(BRISL), tells Carbon Brief that many global-south nations face “delicate challenges” in balancing their commitment to fighting climate change with other national priorities, such as poverty alleviation, energy security and industrial growth.
Abbasov tells Carbon Brief that wider geopolitical tensions soured the IMO talks: “Most of the conversations in the room were about the geopolitical tensions outside the room.”
Participants at the IMO meeting, speaking to Carbon Brief on condition of anonymity, say another factor was the contrast between a “by 2050” net-zero target for shipping – a so-called “hard-to-abate” sector – and China’sown goalfor carbon neutrality by 2060.
One delegate also postulated that China’s objection to the levy was that it would have generated revenues that China did not control. (China’s memo called for any funds raised on shipping to be managed by the IMO and used “only” within the sector.)
Why was China worried about shipping costs?
One of China’s biggest concerns, according to the memo, is that emissions reduction measures would increase shipping costs. It said measures based on “aggressive targets” would “lead to a significant increase in maritime transport costs”.
最初的提议征收航运是聚氨酯t forward by a group of Pacific Island nations. “Pacific island countries always come with the highest ambition and push to the end for it,” Vanuatu climate minister Ralph Regenvanutold journalistsearlier in the week.
However, China framed the levy as a “developed country” proposal in the diplomatic memo. It was instrumental in the building of a coalition of nations to oppose the motion, including India, Brazil, Saudi Arabia, and other developing countries, plus Australia.
It warned that using the proceeds from a shipping levy to fund wider climate action would “make developing countries bear the climate change financing responsibility which should be borne by developed countries”.
Faig Abbasov, director for shipping at NGO Transport & Environment, tells Carbon Brief that he sees China’s efforts to build the coalition as “more aggressive” than at previous IMO meetings.
In his view, this was driven by a recognition that the meetings could have led to the “deal of the decade” in decarbonising the sector. He credits this urgency with the high level of coordinated opposition to the proposals.
Abbasov tells Carbon Brief that while China’s position at the IMO talks mirrors its stance at previous climate negotiations, he found it to be “more aggressive” in building a coalition of opposition to the shipping levy, including Saudi Arabia, India and others.
(A comment for theSydney Morning Heraldby environment and climate editor Nick O’Malley says Australia and Brazil also opposed the levy to protect seaborne trade from higher costs.”)
Is China doing anything to decarbonise shipping?
China is home to the world’slargest shipping fleet,biggest and most numerous ports andthe world’slargest shipbuildingsector. As such, the IMO targets are a challenge for China, but also an opportunity.
The shipping industry is responsible foraround 3%of global greenhouse gas emissions. National data is sparse, butone studyputs China’s contribution at 8% of the global total.
(The Organisation for Economic Cooperation and Development is working on national figures,Robbie Andrewof Norwegian climate instituteCicerotells Carbon Brief.)
At the national level, China has several policies, such as the14th five-year plan on green transportation, which include targets for lowering shipping emissions.
Several local governments, such as Shenzhen, haveissued legislationon the “green and low-carbon transformation” of shipping. Meanwhile, the Shanghai regional emissions trading schemecoversthe shipping sector.
China is also exploring the use of low-carbon “alternative fuels”, with state-owned China Merchants Groupdeveloping ammonia-fueled ships. China’s firsthydrogen fuel cell-powered boatwas launched earlier this year.
China accounted for half of global shipbuilding orders in 2022, saysHellenic Shipping News. It also “bag[ged]” half of orders for “dual-fuel green vessels”,SeatradeMaritimereports, quoting Li Yanqing, secretary-general ofChina Association of the National Shipbuilding Industry, saying “green fuel for vessels is the general trend”.
Analysis fromLloyd’s Listsays: “Shipbuilding contracts for dry bulkers and tankers adopting new fuel technologies are expected to grow substantially from 2025 onwards.”
Some of China’s decarbonisation efforts are happening in tandem with other nations: China Merchants Group isworking withJapanese and Italian partners to develop ships fuelled by ammonia or other new energy sources; the Port of Shanghai hasestablisheda “green shipping corridor” with the Port of Los Angeles; and Sri Lanka’s Hambantota Port, which was funded and built by China,suppliesfuel designed to meet the IMO’s 2020 sulphur regulations.
What happens next for the IMO and climate?
While talks at the IMO will continue over how to actually cut emissions to net-zero “by or around” 2050, Abbasov argues national or regional action will need to become the main focus. He says: “For us it’s very clear, the 1.5C goal for shipping is dead at the IMO.”
Other organisations, as outlined byCarbon Market Watch, believe the agreement is indicative of “a pattern of behaviour” that raises “further questions about the institution’s suitability as a venue for tackling shipping’s serious impact on the climate and oceans”, particularly in terms of the IMO’s “institutional transparency”.
Ranaraja disagrees, telling Carbon Brief that the IMO should remain the key venue for international efforts to tackle shipping emissions:
“Apart from addressing a just transition for the cleaner shipping industry, there is a greater communication challenge between specific divides over GHG emissions, and underrepresentation of issues of global south when it comes to regulations GHGs, and to undo the long-standing legal conflict of the ‘common but differentiated responsibilities’ approach…Strengthening the participation of IMO rather than weakening its position by implementing regional regulations bypassing the proceedings…will be essential for international cooperation.”
Josh Gabbatiss’sreportingfor Carbon Brief at the IMO talks contributed to this article.
A shorter version of this article first appeared in Carbon Brief’sChina Briefingnewsletter on 13 July 2023.