Advance of climate laws increases urgency to regulate shipping emissions

Evidence mounts by the day that our planet is heating up, and prospects of us preventing dangerous climate change, which all countries have agreed should be avoided by limiting warming to no more than 2C, seem to be receding by the day. Indeed, current projections may imply possible warming of 4C or more to temperatures that probably have not been seen on Earth for tens of millions of years, with consequences that could be catastrophic.

In response, countries are now advancing climate change laws and introducing regulation to control emissions of greenhouse gases from a range of sectors. This, in turn, is increasing pressure on the shipping industries to regulate emissions.

Recognising the difficulties of allocating emissions from shipping and aviation to individual countries, the Kyoto Protocol tasked the key international bodies – International Civil Aviation Organization (ICAO) and International Maritime Organization (IMO) — to develop ways to tackle emissions from these sectors. As we have subsequently seen, the lack of significant progress by these bodies led to the European Union taking the unilateral step to include the aviation sector in its own emissions trading scheme.

As a result, this has raised the pressure on the ICAO to accelerate progress towards an internationally agreed way of regulating emissions from the aviation sector. Similarly, if sufficient progress is not made by the IMO soon, it is likely that progressive countries or country blocs will begin to develop their own national or regional regulation for the shipping sector. In that context, and to avoid the need to comply with multiple potential regulatory regimes, it would be a sensible precaution for the shipping industry to develop a credible plan to tackle emissions involving all countries.

So what exactly are these climate legislation and regulatory trends at the national and sub-national level?

In contrast to the pace of international negotiations, domestic laws to address climate change are proliferating rapidly. In the past year alone, as described in a landmark report published last month by GLOBE International and the Grantham Research Institute at the London School of Economics, 32 of 33 surveyed countries, which collectively account for more than 85% of global carbon emissions, have introduced or are progressing significant climate or related legislation and regulation.

This is nothing less than a ‘game-changing’ development, taking place across all major continents. Cumulatively, it represents a crucial and vastly under-appreciated change. And it mirrors a broader crossroads in international relations, with continuing economic malaise in the west being counterpoised with an increasingly rapid shift of power to emerging economies:

• For example, China passed its first sub-national legislation last year in order to control greenhouse gases in Shenzhen and is developing a national climate change law;
• Mexico passed a ground-breaking General Law on Climate Change, legislating for a quantified emissions reduction target of 30 per cent below “business as usual” by 2020, together with the first Redd+ readinesss legislation to tackle deforestation;
• South Korea passed legislation to begin a nationwide emissions trading scheme by 2015;
• Bangladesh passed the Sustainable and Renewable Energy Development Authority Act;
• Kenya approved its climate change national action plan and its parliament is debating the climate change authority bill;
• Other important advances have been made by Ethiopia and South Africa and embodied in their medium-term planning frameworks.

As these examples illustrate, a fundamental finding of the GLOBE International report is that developing countries, which will provide the motor of global economic growth in coming decades, are leading this drive. Many, including China, are concluding it is in their national interest to reduce greenhouse gas emissions by embracing low-carbon growth and development, and to better prepare for the impact of climate change.

They see that expanding domestic sources of renewable energy not only reduces emissions but also increases energy security by reducing reliance on imported fossil fuels. Reducing energy demand through greater efficiency reduces costs and increases competitiveness. Improving resilience to the impacts of climate change also makes sound economic sense.

Indeed, many governments and companies have recognised that a green race has started, and they are determined to compete. They also acknowledge that, over time, those that produce in “dirty” ways will be increasingly likely to face “border adjustment mechanisms” which take account of the subsidy associated with their taking advantage of any unpriced pollution.

While progress has generally been slower among the richer nations, some are showing leadership, such as the UK through its 2008 Climate Change Act. In the United States, existing environmental regulations are being used to tackle climate change, and states are moving more quickly, such as California, where trading started this month in its new carbon market. Moreover, in the last 12 months the European Union passed a new directive on energy efficiency, and Germany strengthened legislation relating to CCS and energy efficiency.

It follows, therefore, that advancing domestic legislation on climate change, and experiencing the co-benefits of reducing emissions, is a crucial building block to help create the political conditions to enable a comprehensive, global climate agreement to be reached. Tellingly, it was Christiana Figueres, UN Framework Convention on Climate Change Executive Secretary, who re-asserted at the latest annual UN climate change summit in Doha last December that national and sub-national government policy is key to the accelerated response to climate change that is needed.

Domestic laws give clear signals about direction of policy, increasing confidence and reducing uncertainty, particularly for the private sector which can drive low-carbon economic growth. The shipping sector should take note.

As is increasingly recognised, it is only by implementing such frameworks that the political conditions for a comprehensive global agreement will be created in coming years. The clear implication is that if enough of these domestic frameworks are put in place in key countries in the next few years, it will catalyse negotiations on a post-2020 global deal scheduled to conclude in 2015. Sound domestic actions enhance the prospects of international action, and better international prospects enhance domestic actions.

More emphasis will therefore be placed on bilateral and regional activities to encourage the advance of domestic legislation between now and 2015. That means greater engagement, primarily, between legislators and parliaments, a constituency that has long received too little attention within the environment and sustainable development agenda.

Taken overall, it would be a sensible precaution for the shipping sector to recognise these trends and develop a credible plan to tackle shipping emissions involving all countries, or potentially face the need to comply with multiple potential regulatory regimes across the world. The urgency to act will only grow as the momentum for action to tackle climate change at the national and sub-national level continues to build ahead of agreement of a potentially strong global agreement.