The Daily View: It’s not dead, it’s just resting

SHIPPING needed a decision. Instead it was presented with a dispiriting display of geopolitical power games, procedural posturing and ultimately another year for the industry to drift in regulatory uncertainty.

The vote this week at the International Maritime Organization to delay adoption of the Net-Zero Framework for one year, had little to do with shipping, or climate change for that matter.

This was a political deferral of a deal that would set a dangerous precedent for all other sectors by creating the first globally binding carbon price on any industry.

Shipping’s 3% accountability of greenhouse gas emissions are immaterial compared to the output of energy, agriculture, manufacturing, or indeed most other sectors. But establishing a carbon tax on ships comes with consequences that governments are still deeply divided on, and apparently not ready to make a call on.

This vote was hijacked as a litmus test of how prepared governments are to follow through on the Paris Agreement.

It was a signal of how much progress can now be made in what remains of multilateral efforts to combat climate change.

The fact a slim majority won a deferral shows that neither side is ready to move ahead by consensus. And so, shipping is once again left waiting, uncertain how to move forward, but with fewer good options left on the table.

Shipping’s net zero business case is not dead, but large parts of it are in stasis.

In that respect, little changes.

Any progress towards energy efficiency from the industry during the past five years has realistically been driven by cost savings rather than any faith in the regulatory outcome of this process.

But the uncertainty of what follows is damaging. It delays investment and adds another layer of uncertainty for an industry that has already been weaponised in trade wars and is increasingly being asked to choose political sides.

The IMO’s usual spirit of consensus and collaboration was notably absent this week and governments have been left reeling from a bruising, aggressive series of confrontational exchanges.

Shipping companies too have felt the direct heat of bullying geopolitics. Threats were issued, reprisals were promised and chief executives and government representatives alike were ultimately left to make a call of pragmatism in the face of decisions beyond their sphere of influence.

The decision to defer the decision keeps alive the prospect of a compromised Net-Zero Framework to come, and in that respect it was the least worst decision available amid unreconcilable differences.

But it also leaves open the very real prospect that another 12 months of bullying threats, economic offers and realpolitik could kill this deal entirely.

In the meantime, shipping is left navigating the uncertainty of geopolitical outcomes it can’t control knowing that the likely end game is more regional measures, more costly complexity and a fundamentally weakened global system of governance.

Richard Meade
Editor-in-chief, Lloyd’s List

Click here to view the latest Lloyd’s List Daily Briefing