Synopsis

• Emission allocation:

-- (None¹; using the UNFCCC SBSTA option 1 – no allocation)

• Allowances distribution:

-- (None needed)

• Participating entities:

Fuel payers for charges; ship managers and/or suppliers for reporting

• Reporting, Verification and Compliance:

Direct electronic; compliance enforced in selected ports, both for the provision of data (such as BDN) and payment of charges

• Accurate data & availability:

Emission growth: available

• Minimum operational data:

Fuel data, used or delivered: available (starting with Bunker Delivery Notes, BDN)

• Reuse of existing work, and procedures:

Voyage data for validation; CO2 index from real data once the scheme operates, used as a performance measure for ships, routes etc.

• Authorities and their roles:

IMO for governance; World Bank, or similar,  to manage adaptation funding (recommended Adaptation Fund under the UNFCCC)

• Emission target:

Yes; enclosed calculations done for notional reductions of 20% in 2020, and 50% in 2050 from 2005 level

• Emission baseline and/or emission growth:

Baseline not needed, and avoided as it is currently commercially inadequate.
Emission growth only needed (average 2.1% pa used till 2035)

• Grouping for equity:

Bubbles for containers, bulk, tankers, etc., could further improve the scheme equity and speed up implementation

• Time to implement:

2 years – could be operational BEFORE 2012

• Geography:

Worldwide

• Participants:

All vessels > 400 GT

• Emission target:

Global, or per vessel bubbles (containers, bulk, tankers, …)

• Additional goal:

Adaptation to climate change in developing countries

• Emissions:

International, CO2 only at the beginning

• Common but differentiated responsibility:

Through financing policy for adaptation;  differentiation at point of distribution rather than collection

• Impact on competitiveness:

None in sector; negligible outside shipping

• Benefits to participants:

A hassle-free long-term solution, increased cash flow, compliance easily verifiable, long term investment clarity, better image of shipping

• Legal basis & precedents:

Could be under MARPOL; IOPCF -  a precedent for a direct fund; aviation route charges as an example of delegating collection and billing responsibility to a central organisation (Eurocontrol in Europe)

• Price impact:

Low: 0.1%, equivalent to adding $1 to price of $1,000 of imported goods

• Participant costs:

Negligible          (20 minutes reporting time for ship managers per month)

• Unit emission charge:

$10/tCO2 or $30/tFuel           (linked to emissions and carbon price)

• Operational costs:

Under 5%           (a centralized solution; operational ratio higher in the initial years)

• Emission mitigation:

$4bn/pa; Total mitigation of 26 GtCO2 by 2050         (30% of it is emission avoidance)

• Improvements:

+0.5% annually, $2bn/pa Technology Fund, for transformational R&D and technology transfer

• Adaptation:

$4bn/pa, for developing countries (likely as contribution to the UNFCCC Adaptation Fund)

• Eligibility ("Carrot & Stick"):

Only parties that legally support the scheme are eligible to participate in the scheme benefits (adaptation, technology and so on)

• Market linkages:

Cost-effective through usage of carbon markets, and a dedicated maritime emission registry

• Mechanisms used:

CDM, CERs without limits; also programmatic CDM for increased quality

• New and existing ships; and new entrants:

Applies to both existing and new ships; no problems with including new entrants as scheme is based solely on charges, rather than allowances

• Adjusting to new realities:

Charge annually; funding policy reviewed and adjusted periodically by IMO

• Starting small, and learning by doing:

Can be limited to ship type or size threshold; easy scaling up thanks to the harmonized charge that does not vary with the number of participants