The things that work well and are easy to use tend to become those that endure. Things that are difficult to understand and get to grips with tend to fail and sooner or later will fall out of use.
So it is curious that a majority of shipping industry leaders continue to believe that global regulation should be the only option, especially when it’s clear that maritime has as at least as many regional and cultural differences as any other industry.
After all, no-one seriously believes the industry operates at a single global standard in any other way.
Perhaps regional regulation hubs are better than nothing
As anyone interested in the subject will know, drawing up global standards is fraught with challenges. Enforcing them equitably is close to impossible if the evidence of those at the sharp end is to be believed.
It is unfortunate for IMO that the pandemic co-incided with the breaking of the post-1945 global consensus but a scamper through current geopolitics suggests that some fracturing was all but inevitable. The changing balance of power in global trade, technology and defence made sure of that.
In a world that trades only freely at times but certainly in great volume, it seems logical that if a large trading bloc wants to enforce the highest possible environmental standards as the price of doing business, it will do so like it or not.
It took a decade for the revision of Marpol Annex VI to turn into IMO2020
This is not to say the EU’s plan for shipping within its Emissions Trading System is a good idea. As has been seen before, in the absence of a global system, a regional ETS won’t work without fungibility to other regional schemes.
In that event perhaps European, US or Asian owners would feel happy paying into a regional fund that can direct the money where it is most needed and be administered in a way that keeps them contributing?
But in a world where uneven enforcement means that in reality double standards already exist despite the best intentions of the regulator, perhaps regional regulation hubs are better than nothing.
I fully accept this will be an unpopular suggestion for several reasons. A two or three tier system risks skewed commercial advantage at the least and a lack of environmental protection where arguably it is most needed. There are implications for economic development, skills and capacity building too.
But the world that gave us global regulations as the default position is changing and arguably disappearing. For one thing, the widely-held view that shipping capacity and therefore greenhouse gas emissions would continue to increase rapidly in future has been altered by decarbonisation and by Covid-19.
Even so, the chances of IMO agreeing anything beyond energy efficiency measures quickly are slim; let’s not forget it took a decade for the revision of Marpol Annex VI to turn into IMO2020.
That is too slow for the decarbonisation agenda. The regulatory vacuum caused by the relative speeds to action of the EU and IMO asks the question of whether the industry should wait for a global solution when regional ones might work.
The argument that we should ‘let the leading countries lead’ in establishing standards should not be interpreted as an attempt to discriminate against developing nations or regions. But it does reflect the reality that given a contentious enough subject, the IMO’s members can take all the time in the world and still produce results that don’t please everyone.
Some blame must also be apportioned to national governments who hide behind the skirts of the IMO process as a way to delay unpopular or costly regulation. Some of these are developing nations, others put rockets into space so are perfectly willing to devote the necessary resources when they choose to.
The changed world in which we live also includes market mechanisms that seek to make access to finance contingent on improving environmental performance. If lack of access to capital forces the players who don’t commit to lower carbon operations out of the market, is that really a bad thing? The EEXI may do something similar after all.
Recent thinking even suggests that new players might come into post-Covid shipping and shake it up. That remains to be seen but could smarter ways of raising finance be created that enable developed countries to enact regulations and even generate funds that can be transferred to developing nations?
Pre-pandemic, the idea that the shipping industry would work together at anything other than the highest level would have been a stretch. Now, it seems some shipowners, including members of the Global Maritime Forum think the time has come to look collectively at regional solutions for progress.
It seems almost heretical to suggest it, but perhaps it makes sense to define what regional systems, administered locally and responsive to local conditions, might look like and whether it would really be that much worse than what we have now.
The IMO is in the death throes of inadequate ability to deliver anything useable PERIOD
Charterers are setting standards, banks are setting standards, the EU is setting standards. Its called disruption and it is coming to a country and industry near you. Nothing surprising, it has been on the cards for years. When Trump came in he was the result of, not the cause of the global unease with anything over arching. People are sick of big useless government and it appears in shipping also.
The only question is what fuel and when? Will the charterers finally pay a fair rate for market leaders? In the midst of all this madness we have to remember oil will be with us for a long, long time. Maybe not as a fuel but we need it in almost everything we make and use. Even large parts of a Tesla is made of oil.
Thanks Neville – a really interesting and thoughtful delve into a big topic. In my corner of shipping (recycling) the same case could be made of the EU’s Ship Recycling Regulation and IMO’s Hong Kong Convention which was adopted in 2009 and many believe is unlikely to enter into force before 2023. More than 10,000 ships will have been scrapped in the intervening period. Aside from the politics, objective and transparent measurement of the success of regional regulation is surely a ‘must’ if shipping is to make meaningful progress.
Your “Regional regulation” is worth $ 600. It is the price at Lloyds Register to change the flag of a tanker.
Despite criticism by the Industry on the outcome of the recent IMO meetings on reducing carbon emissions, it is negatively astounding that some Shipping CEOs are verbalizing on the “beauty of IMO”, in leading the way forward achieving the targets by staging the run events of sprints, or marathons (you choose), running together, or alone, (you choose), with impotent regulation (if any), and blind guidance (in excess for convenience), sticking to existing and old technology squeezed from its last drops of efficiency reserves… With origin footprint visible, but going towards multiple destinations without a compass.
Bottom line of Shipping still verbalizing on “IMO’s beauty” is nothing more than a “beautiful convenience” of IMO’s staging a Marathon of Business as Usual…for the Industry which is optimistic despite of being unable to see beyond the time-fence needed for critical decisions now, instead of catalytic expenses for the Industry and the environment tomorrow. IMO’s authority to ensure that when trade grows, emissions do not grow, is driven by its own political and lobbyist devices, to no effect. The Regional Policies are being surfaced by the IMO’s impotence, which will intensify the global fragmentation and a serious disruption of the Industry modus operandi and will allow Gigs business to control the regulations, with different speeds and directions towards different targets and objectives. You never know what an invitation of entry to a stranger holds for the homeowner…