CBDR at MEPC 64

Once more working late at night did not help the IMO MEPC 64 to achieve further progress on reducing shipping emissions in autumn 2012, following a similar attempt earlier in the year. MEPC 64 aimed, but failed again, to agree and adopt a Resolution on promotion of technical co-operation and transfer of technology relating to the improvement of energy efficiency of ships. Further discussions of Market Based Measures (MBMs) continue to be held back, pending the adoption of the Resolution.

The discussions at MEPC 64, held in London from 1 - 5 Oct 2012, demonstrated the need to resolve, on the political level, the question of how to take into account the principle of CBDR, in context of climate change measures at the IMO (CBDR refers to the principle of common but differentiated responsibilities and respective capabilities of the UNFCCC).
Further discussion of the draft Resolution, which seems key to any further progress on addressing climate change in the IMO, will take place at the next session (MEPC 65, in 2013).

Focus of the session: the Resolution

Within the IMO, climate finance relates generally to measures to increase energy efficiency of ships and reduce emissions of greenhouse gases (GHG) from international shipping, and in particular to Market Based Measures (MBMs). In this area, the vital objective stated at the opening of MEPC 64 by the Secretary General, Mr. Koji Sekimizu and the MEPC Chairman, Mr. Andreas Chrysostomou (Cyprus) was to adopt an MEPC resolution on Promotion of Technical Co-operation and Transfer of Technology relating to the improvement of energy efficiency of ships (the “Resolution”). Thus the discussion on the proposed MBMs was to be limited at the session.
However, the Resolution was not concluded at the session, while the new submissions on the MBMs were only introduced shortly, given the limited time, and the detailed debate on MBMs was postponed to the next session (MEPC 65). The Resolution was considered under agenda item 4, while the MBMs - under agenda item 5.

Air pollution and energy efficiency (Agenda item 4)

A new chapter 4 in the Annex VI to the MARPOL convention was adopted at MEPC 62 (2011), which will enter into force on 1 January 2013. The chapter includes new requirements mandating the Energy Efficiency Design Index (EEDI), for new ships, and the Ship Efficiency management Plan (SEEMP) for all ships. The chapter required several additional elements to be adopted at MEPC 64. The technical elements, namely various amendments and unified interpretations to the 2012 implementation guidelines for EEDI and SEEMP, were developed, and agreed.
However, MEPC 64 failed to agree and adopt once more an element with certain political aspects, namely the Resolution on promotion of technical co-operation [...], which was “promised” to the developing countries at the time of adoption of the new chapter 4 at MEPC 62. A Working Group, facilitated by the MEPC Vice-Chairman, Mr. Arsenio Dominguez (Panama), had a task to debate and to finalize the text for three specific points: CBDR , transfer of technology, and funding. The group developed a text of the draft Resolution, but could not agree on several paragraphs, which remain in square brackets (they mainly relate to CBDR and the transfer of technology from “developed to developing countries”). The committee agreed to use the text, as a basis to finalize the draft resolution, with a view to its adoption at MEPC 65 in May 2013.

Reduction of GHG emissions from ships (Agenda item 5)

Under this agenda item the MEPC endorsed, in principle, the outline for an update of the greenhouse gas (GHG) emissions estimate and agreed that an expert workshop should be held in 2013, to further consider the methodology and assumptions to be used in the update.
Regarding MBMs, the MEPC received updates to several of the proposed MBMs (including on the RM draft legal text considered under climate finance and use of MBM revenues). These were shortly introduced but not discussed in view of time constraints, and following comments by some delegations on the urgent need to finalize the draft Resolution. The MEPC agreed to postpone detailed debate on MBMs to MEPC 65. This would include discussion of the methodology and criteria for a comprehensive impact assessment of an MBM for international shipping, under the auspices of IMO.
Although not related directly to the MEPC 64, on its first day the European Commission announced the proposal for implementing a regional monitoring, reporting and verification of shipping emissions, which was widely perceived as the EU giving up on an EU MBM for shipping.

Further submissions on the Rebate Mechanism

The draft legal text for the Rebate Mechanism has been developed in consultation with various negotiators. The text was submitted as document MEPC 64/5/10 and introduced at the session by WWF. The document provides draft regulatory text on uses of financing generated from an MBM in form of additions to a potential convention based on the Rebate Mechanism proposal. It is available in 3 languages:

• MEPC 64/5/10 in English , Draft legal text on uses of financing generated from a maritime MBM
• MEPC 64/5/10 in French , Projet de texte juridique sur l'utilisation des fonds générés par une MBM applicable aux transports maritimes
• MEPC 64/5/10 in Spanish , Proyecto de texto jurídico sobre los usos de los recursos financieros generados mediante medidas de mercado marítimas
  
• Base proposal is also available in these languages.
  

The second submission on the RM has been developed to incorporate trading distances, as requested by some developing countries with long trading distances. The document MEPC 65/5/12, submitted by WWF, provides a country's share of value-distance of global imports from non-adjacent countries for nearly 200 countries which may be used as the rebate and credit keys in the Rebate Mechanism. The document is available in 3 languages:

• MEPC 64/5/12 in English ,Incorporating impact of trading distances in the Rebate Mechanism
  
• MEPC 64/5/12 in French , Prise en considération de l'impact des distances parcourues par les produits dans le mécanisme de rabais
• MEPC 64/5/12 in Spanish , Incorporación en el mecanismo de reembolso de la repercusión de las distancias de navegación comercial.
  

MEPC decided to consider the two documents at the next session, alongside other proposals.
As no proposal was discussed in any detail, there was no progress on developing a Market-Based Measure for GHG emissions from international shipping, and thus climate finance from shipping, at the MEPC 64.

Outlook for MBMs

To achieve progress on MBMs for international shipping it seems that the CBDR principle must be taken into account somehow and a new political narrative may help in achieving this. The new narrative may focus on the potential to reduce both the emissions and cost of international transport, while also generating climate finance from developed countries, and contributions to international cooperation from emerging economies.
The progress is not guaranteed though and the complexities of the issues involved cannot be underestimated.

Further information on MEPC 64

Official information on the progress achieved at MEPC 64, on its wide agenda, is available from the IMO.