Q10: Is the scheme ambitious enough given that it may be limited to emissions from Annex I?

Please note that this Question is not relevant for the latest, refund version of IMERS.
In the refund version emissions from all ships are subject to the scheme (i.e. 100% of emissions from international shipping).

Previous version based on final destination of goods

Approximately 60% of shipping emissions are attributable to Annex I countries, based on volume of unloaded cargo. Therefore 60% of emissions will be addressed on day 1 of the scheme with an ambitious emission reduction goal – such as 20% emissions reductions by 2020 – as it would apply to Annex I countries only. The current regime does not guarantee any reductions whatsoever in the sector.

The scheme scope and cap are not independent. Expanding the scope to developing countries in a uniform manner is likely to lead to a significantly less ambitious, diluted cap. The end result might actually be the same or even worse than a scheme applied only to Annex I, not to mention being less likely to be accepted in the first place.

Objections for such a uniform scheme would stem from both sides. For instance to achieve similar total reductions as for the Annex I scheme, it would be enough for the uniform scheme to use a simple stabilization goal at the 2005 level. However simple, this goal for shipping emissions would be in our view: 1) difficult to accept in Annex I countries as not ambitious enough for the public and at odds with national targets, 2) impossible to accept in non-Annex I countries due to the principle of common but differentiated responsibilities and respective capabilities (CBDR), and the reality that greater reduction commitments and costs would be imposed on them than on developed countries.

Furthermore, IMERS can easily accommodate an important additional goal: to deviate below business-as-usual emission trajectory. This could enable some developing countries to enter the scheme. However for them the differentiated levy would be determined from the committed emission deviation and market carbon price, rather than the cap and carbon price used for developed countries. This would increase the ambition of the scheme further. Inclusion of such a deviation commitment in any cap-and-trade scheme seems rather complex, if not impossible.