Climate Change and the International Maritime Organization: Another Breakthrough at the Marine Environment Protection Committee?

Acknowledging the global and complex nature of shipping activities, the Kyoto Protocol, Article 2(2) entrusts the reduction of greenhouse gas (GHG) emissions from marine bunker fuels to the International Maritime Organization (IMO).[i] Since 1997, the IMO Marine Environmental Protection Committee (MEPC) has been actively engaged in discussions concerning the reduction of GHG emissions from ships and the elaboration of a legal framework for energy efficiency in the shipping industry as a means of tackling climate change. In what was heralded as a historic decision, the MEPC adopted mandatory measures to reduce GHG emissions from ships at its 62^nd Session in 2011. These measures represent the first legally binding, multilateral climate change-related agreement since the Kyoto Protocol. Another breakthrough took place at the MEPC’s recently completed 65^th Session (May 13-17, 2013). Following strenuous negotiations, it adopted a long-awaited resolution on technical cooperation and transfer of technology[ii] to enhance and strengthen its measures on energy efficiency.

This Insight presents an overview of the negotiations and the outcomes of the 65^th Session of the MEPC with an emphasis on the adoption of the Resolution on promotion of technical cooperation and transfer of technology, and the divisions in the MEPC with respect to the interaction between the IMO and the climate change regime.

A breakthrough at MEPC 62: adoption of mandatory measures on energy efficiency

The regulations on energy efficiency for ships adopted in 2011 as Chapter 4 of MARPOL Annex VI on Air Pollution from Ships provide for mandatory technical measures in the form of the Energy Efficiency Design Index (EEDI) for new ships, and for a Ship Energy Efficiency Management Plan (SEEMP) for all ships.[iii] The adoption of these measures, which came into force on January 1, 2013, proved particularly controversial. The main point of contention was the interaction between the IMO and the climate change regime. Developed states clearly expressed their determination to adhere to IMO’s principles of non-discrimination and no more favorable treatment with respect to the universal application of the adopted measures, upon which the shipping industry is dependent for a clear and globally-applied legal framework.[iv] This was thought to enhance effectiveness and avoid carbon leakage. Indeed, the measures adopted are to apply to all Annex VI parties without discrimination and irrespective of the flag or the ownership of the vessel.

On the other hand, some developing states stressed that measures adopted by the IMO should respect the principles established by the UN Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol, especially the principle of common but differentiated responsibilities (CBDR) in order to “ensure coherence and consistence with the climate change regime.”[v] Several states suggested phased-in application and voluntary measures for developing states to reflect these principles.[vi] Brazil, Chile, China, Kuwait and Saudi Arabia voted against the amendment of Annex VI, and some states reserved their positions with respect to the adopted measures, which they considered as not respecting the UNFCCC principles.[vii] The adoption of these measures by majority vote, a rare occurrence in the practice of the MEPC that normally adopts mandatory measures by consensus, was a grievance for some developing states which considered it “a threat to the legitimacy of MEPC to deal with climate change issues and [undermining] the multilateral approach that is fundamental in addressing GHG emissions.”[viii]

Another breakthrough at MEPC 65? The Resolution on promotion of technical cooperation and transfer of technology

MEPC 62 also adopted Regulation 23, concerning technical cooperation and transfer of technology, as a necessary element of the regulatory framework on energy efficiency for ships.[ix] A draft resolution providing the framework for the effective implementation of this regulation was discussed during the informal negotiations but failed to achieve consensus. Discussions continued in subsequent sessions of the MEPC, especially within a dedicated working group established at MEPC 63 and 64. The report and draft resolution submitted by the Working Group was accepted by MEPC 64 as an interim agreement for discussion and finalization during MEPC 65.[x]

The negotiations during MEPC 65 came very close to failing. A number of delegations supported South Africa’s compromise draft resolution,[xi] but it soon became evident that developing states were keen to continue the discussion in the working group and that they were not pleased with aspects of the resolution. Following a deadlock in the working group and informal negotiations led by the MEPC Chairman,[xii] a draft resolution was presented to the Plenary the last day of the Session. After an ardent plea by the Chairman, the resolution was adopted by acclamation.[xiii] This was, however, followed by a number of delegations clarifying their positions in the matter.

The main issue of contention was the preamble, and in particular whether (and how) reference should be made to the seemingly conflicting principles: non-discrimination and universality within the framework of the IMO, and the CBDR principle as expressed in the UNFCCC and the Kyoto Protocol. Developing states were determined to have the CBDR principle explicitly mentioned in the preamble. On the other hand, developed states wanted the preamble to refer to the principle of non-discrimination and no more favorable treatment as applicable within the framework of the IMO. The ensuing compromise referred to both principles, using similar wording and introducing each with the phrase “being cognizant of.”

An important aspect of the resolution is the establishment of an Ad Hoc Expert Working Group on Facilitation of Transfer of Technology for Ships. The mandate of this group is twofold: first, to assess the implications and impacts of the implementation of the new regulations and to identify technology transfer and financial needs of developing states; and second, to create an inventory of energy efficiency technologies for ships and to identify barriers to technology transfer, especially for developing states,. The Working Group has the power to make recommendations to the Committee for the implementation of the regulations. Proposals for an IMO technology transfer trust fund to support implementation of the regulations[xiv] were rejected.

The IMO is requested to provide technical assistance to member states, especially to developing countries, enabling cooperation on energy-efficient technology transfer. Other international and regional organizations, NGOs and the industry are also invited to contribute to the effective implementation of the regulations. IMO’s International Technology and Cooperation Programme has already allocated funding for training activities, and the IMO has established a joint partnership with the Korea International Co-operation Agency (KOICA) to provide capacity-building support.[xv] Canada also reported that it had been working with Finland, other countries and the IMO Secretariat on capacity-building activities “building on the excellent work of KOICA and IMO Secretariat.”[xvi]

Member states are requested to provide support for technology transfer, research and development, training of personnel, and other related activities. An obvious omission is any reference to developed states. The resolution referred solely to ‘member states with an ability to do so’ without referring to their level of development. This would imply that a developing state with the relevant capacity should contribute to the realization of the Resolution.

A number of qualifications mitigate the strength of the Resolution. Paragraph 6 requests member states with the relevant ability to provide support, “subject to their respective national laws, regulations and policies.”  It is also explicitly recognized that “the transfer of technology needs to respect property rights, including intellectual property rights, and to be on mutually agreed terms and conditions.” Whereas this type of contextual qualification provides flexibility with respect to how countries will implement their obligations, it also introduces an element of uncertainty with respect to implementation of the obligations.

A number of developed states reserved or clarified their positions following the adoption of the Resolution. They consider that the principles of non-discrimination and no more favorable treatment apply with respect to any measures adopted by the IMO MEPC.[xvii]  The USA and Canada disassociated themselves from any reference to the Kyoto Protocol as non-parties to this agreement. On the other hand, developing states expressed their contentment with the explicit reference to the CBDR principle in the preamble of the resolution. These states considered the Resolution a vindication of their attempts to have the special circumstances of developing states recognized, in line with the UNFCCC.[xviii] India and China expressed concern about the practical realization of this resolution, and China specifically referred to the potential obstruction of transfer of technology by IP restrictions.

Further measures and issues of contention

MEPC 65 also worked on technical aspects of the measures adopted for new ships[xix] and considered proposals for the improvement of energy efficiency of existing ships.[xx] Developed states supported a phased approach with an emphasis on data collection.[xxi] They stressed the importance of a monitoring, verification and reporting stage to provide relevant data to develop further regulatory measures. The EU is currently considering the adoption of such measures, especially in the absence of an international agreement within the framework of the IMO.[xxii] Discussion of these suggestions in the IMO had been stalled at the insistence of developing states, which conditioned any further discussions on the adoption of the Resolution on technical cooperation and transfer of technology. With the Resolution now adopted, this barrier to discussions on further measures has been lifted.

The use of market-based mechanisms (MBMs) to reduce GHG ship emissions and to finance climate change mitigation and adaptation has been discussed in the MEPC on a number of occasions.[xxiii] A variety of measures have been suggested ranging from contribution schemes to vessel efficiency systems and emission trading schemes.[xxiv] Some developing states have expressed their opposition to the adoption of MBMs due to lack of competence of the IMO, incompatibility of these measures with the UNFCCC, and the disproportionate disadvantage they will inflict on developing countries.[xxv] Issues regarding the incompatibility of such measures with the WTO have also been invoked.[xxvi] Discussion on MBMs was included in the agenda of MEPC 65, but this discussion was suspended until a future session.[xxvii] Due to the clear opposition of some states, it seems unlikely that consensus can be achieved on this issue.

Conclusion

The Resolution on promotion of technical cooperation and transfer of technology is an important step towards the effective implementation of the measures adopted in 2011. It also demonstrates that compromise and consensus are possible despite some polarization in the MEPC. The tension between developed and developing states in the UNFCCC negotiations has infiltrated the IMO process despite clear attempts by developed states to dissociate the two regimes.[xxviii] States are also apprehensive that any decisions in the IMO may prejudice their positions in the negotiations within the framework of the Durban Platform for Enhanced Action for a global deal by 2015.[xxix] The principle of CBDR, an important element of the climate change regime, is an issue which will continue to come up in the MEPC negotiations. It is thus important for states to consider the contemporary relevance and application of the CBDR principle within the IMO regime, and how universality and non-discrimination (as advocated by the IMO) can effectively accommodate aspects of the CBDR principle with the view to successfully develop an efficient regime against climate change, at the same time taking into consideration the interests of developing states.