The ITLOS Advisory Opinion and the Normative Future of IMO GHG Reduction Measures

[Sindhura Polepalli is a Maritime Legal Consultant to the Directorate General of Shipping (Ministry of Ports, Shipping and Waterways, Government of India)]

This post is written in the author’s personal capacity.

On May 21, 2024 the International Tribunal for the Law of the Sea (ITLOS) confirmed in its Advisory Opinion (AO) that climate change poses an existential threat (ITLOS AO, para 66). The Tribunal noted that human activities have played an “unequivocal” role in increasing greenhouse gas (GHG) concentrations, which the  Intergovernmental Panel on Climate Change (IPCC) has identified as accelerating global warming, which is a key driver of climate change (2021 IPCC Report,  p. v & 6). 

The oceans serve as a “fundamental climate regulator” (2019 IPCC Report,  p. 78). Interfering with this key climate regulator can further degrade the global climate system. Therefore, it is not surprising that ITLOS AO affirmed that the 169 States party to the United Nations Convention on the Law of the Sea (UNCLOS) have “specific obligations to take all necessary measures to prevent, reduce and control marine pollution from anthropogenic GHG emissions and to endeavour to harmonize their policies in this connection.” (ITLOS AO, para 441(3)(b)).The pressing global need for deep reductions in anthropogenic GHG emissions (2021 IPCC Report,  p. v & 6) provides an impetus for States to fulfil their obligations under UNCLOS amidst the global urgency to address anthropogenic marine interactions. 

Despite this strategic clarity, the case for reducing anthropogenic GHG emissions in the international shipping sector is rather complex. The history of maritime industry illustrates several technological advancements through build and operation of international ships, which have been instrumental in increased speed, capacity, time and cost efficiency of the maritime trade. Such efficiency has also made the shipping sector the backbone of global trade and economy. The movement from oar to sail and steam brought vast advances in shipping and benefits of trade, but produced greater environmental externalities that have not been well captured.

As global maritime trade has increased, the International Maritime Organization (IMO) has concluded that there is a 62% increase in the share of global anthropogenic GHG emissions attributable to international shipping over the past two decades. By mid-century, 90-130% increase in emissions is estimated in maritime trade compared to 2008 levels (2020 Fourth IMO GHG Study, Foreword). The United Nations Conference on Trade and Development (UNCTAD) reports that approximately 99% of the global maritime fleet relies on conventional marine fuels derived from fossil sources, which emit carbon dioxide (CO₂), a GHG (2023 UNCTAD Review of Maritime Transport, p. 68). Hence, the immediate imperative for the international shipping sector has been to specifically reduce anthropogenic CO₂ emissions, a process termed as decarbonization. The IMO Strategy seeks to reduce GHG emissions from ships to net-zero by or around 2050.

The Baltic and International Maritime Council defines decarbonization as “an overarching term that describes acts, pathways, or processes, by which countries, individuals or other entities aim to reduce and ultimately eliminate [GHG] emissions from human activities.” The goal of decarbonization is to adopt energy efficient and climate friendly methods to help slow the rate of global warming in line with the ultimate objective of the 1992 United Nations Framework Convention on Climate Change (UNFCCC). The UNFCCC is a global treaty with a near universal membership of 198 state parties. It aims to stabilize GHG concentrations in the atmosphere to “prevent dangerous anthropogenic interference with the climate system.” (UNFCCC, Art. 2). The agreement accounts the historical origination of the largest share of global GHG emissions in developed countries, and acknowledges the predictable growth of this share in developing countries to meet their social and development needs (UNFCCC, Pream.). Pivoted on principles of inter-generational and intra-generational equity, the UNFCCC encourages avoidance of adverse impacts on social and economic development of the developing world (UNFCCC, Preamble & Art. 3(1)). It favours the legitimate priority needs of developing countries through the principle of common but differentiated responsibilities and respective capabilities (CBDR-RC), and puts the onus on the developed world to specifically take action for sustainably protecting the climate system (UNFCCC, Pream. and Art. 3(1)). 

The ITLOS AO recognized some elements common to the principle of CBDR-RC in the obligation under Article 194(1) of UNCLOS to take necessary measures to prevent, reduce and control marine pollution from anthropogenic GHG emissions, including by ensuring compliance by non-state actions under the jurisdiction and control of States (ITLOS AO, paras 229 & 396). While such obligation warrants a “stringent” standard of due diligence by States, the ITLOS AO affords flexibility toward its implementation based on the States’ capabilities and available resources (ITLOS AO, paras 241, 243 & 441(3)(c)). Consistent with the UNFCCC, ITLOS has clarified that it is for the developed States to continue taking “lead” in discharging obligations under Article 194(1) of UNCLOS (ITLOS AO, paras 241, 243 & 229, 441(3)(c)).

However, the UNFCCC contains caveats for the international shipping sector. Unlike a national industry or sector, the global character of the international shipping industry requires simultaneous interaction among diverse and multiple stakeholders at scale and across international jurisdictions. As a result, these multinational interactions complicate the attribution of the emissions from the international shipping sector to any particular national economy. Therefore, while the States Parties to the UNFCCC are required to develop, update, publish and make available national anthropogenic GHG inventories, the IPCC Guidelines for National GHG Inventories expressly stipulate that emissions from fuel used on ships engaged in international transport are not to be included in totals of national GHG inventories but reported separately (2006 IPCC Guidelines, Chapter 8, p. 8.4). Furthermore, Article 2(2) of the 2005 Kyoto Protocol solidifies the UNFCCC intent to create a specialised regulatory framework for anthropogenic GHG emissions from the international shipping sector, by expressly affirming the competency of the IMO in this regard.

The IMO is the specialised UN agency with a mission to promote safe, secure, environmentally sound, efficient and sustainable shipping through cooperation. As also reinstated by the ITLOS  AO, the IMO is the  “competent international organization” for the purposes of Article 211 of the UNCLOS to provide the basis for the legislation and enforcement to prevent pollution from vessels (ITLOS AO, para 280). The objective of the IMO, according to Article 1(b) of the Convention on IMO is “to encourage removal of discriminatory action and unnecessary restrictions by Governments affecting shipping engaged in international trade so as to promote the availability of shipping services to the commerce of the world without discrimination”. 

Since 1997, the IMO has been instrumental in addressing atmospheric pollution from ships through Annex VI adopted under the International Convention on the Prevention of Pollution from Ships, 1973, as modified by its 1978 protocol (MARPOL). Today, MARPOL has 161 Parties reflecting approximately 99% of the gross tonnage of the world’s merchant fleet. Consistent with the IMO principle of non-discrimination, MARPOL applies the no more favourable treatment (NMFT) to non-party ships under Article 5(4) to ensure that ships of Parties are not disadvantaged against the former; the result being equivalent surveys or inspections of non-party ships as well as relevant sanctions under national law or possible detention of non-compliant ships calling into ports of Parties.

However, MARPOL Annex VI continues to be a work in progress to incorporate and implement measures to address GHG emission from internationally plying ships. Much of this work is being developed through Marine Environment Protection Committee (MEPC)—one of the five main committees of the IMO. In 2018, the MEPC was successful in developing and adopting IMO’s Initial strategy on reduction of GHG emissions from international shipping (Initial Strategy), which sought to reduce 50% GHG emissions by 2050 compared to 2008 levels. Six years later, the deliberations at the MEPC culminated in the adoption of a much more ambitious Revised Strategy, which aims to reach net zero for the sector already by 2050 (Resolution MEPC.377(80), para 3.3.4).

To meet these goals, IMO strategies enumerate measures that fall within three categories both based on their character as well as the timelines for their finalization by the MEPC. Based on their character, these measures include (1) technical measures that aim to create energy-efficient ship designs, (2) operational measures that ensure ships operate efficiently, and (3) market-based measures (MBMs) that use economic incentives or disincentives to reduce emissions (Resolution MEPC.304(72), paras 4.7.2 & 4.8.3). By timelines, they are (1) short-term measures finalized between 2018 and 2023, which focus on technical and operational strategies like retrofitting ships with energy-efficient devices or reducing speed; (2) mid-term measures to be finalized between 2023 and 2030, which aim to adopt alternative fuels and finalize MBMs; and (2) long-term measures beyond 2030, which continue to pursue emission reduction strategies in the shipping sector (Resolution MEPC.304(72), paras 4.7, 4.8 & 4.9)

For GHG emissions reduction, uptake of alternative technologies, fuels, and energy sources with zero or near-zero GHG emissions is critical (Resolution MEPC.377(80), para 3.3.3). For the international shipping sector, the transition to alternative fuels, which are energy-efficient substitutes for traditionally used fossil fuels, is still at a nascent stage. UNCTAD reports that, in 2022, only 5.5 % of the active fleet used alternative fuels, mainly liquified natural gas (LNG), and to a lesser extent, battery/hybrid, liquified petroleum gas (LPG), and methanol, (2023 UNCTAD Review of Maritime Transport, p. 68), assumed to be delivered in small quantities via small scale terminals with truck-to-ship transfers.(2023 Ricardo & DNV, p.14) For the successful global uptake of alternative fuels, there is a need for established supply chains, infrastructure, and lower costs, as in the case of conventional fuels today (2023 UNCTAD Review of Maritime Transport, p. 68 & 72). Additionally, another major challenge for the uptake of alternative fuels and technologies is the fact that they are practically inexhaustive and continue to require research and development for global technological and commercial readiness, scalability, and regulatory certainty. Financial ability is key to unlock investment to reach such certainty.

Therefore, the IMO’s mid-term call for uptake of alternative fuels and technologies directly impacts the simultaneous economic ability of the developing maritime nations to craft and execute the required policy, legislation, research, development and infrastructure alongside the developed maritime counterparts. The MBMs are being considered as a means to drive such global economic ability. The Revised Strategy has prima facie agreed to finalise a combination of a technical element that sets a goal for progressive reduction of a ship’s marine fuel’s GHG intensity, alongside an economic element comprised of a maritime GHG emissions pricing mechanism (Resolution MEPC.377(80), para 4.5). For the technical part, the illustration of IMO’s success in promoting a similar qualitative fuel standard in the past with the implementation of the global sulphur cap up to 0.50% m/m in 2020 provides industry confidence (MARPOL Annex VI, Regulation 14). However, the effectiveness of any proposed economic element to be implemented as an MBM under the auspices of the IMO continues to embroiled in the global north-south debate.

The implementation of the IMO GHG emission reduction measures are guided by the IMO principles of non-discrimination and NMFT, which mandate equivalent treatment to all ships, and the UNFCCC principle of CBDR-RC, which encourages differential treatment based on considerations of socio-economic circumstances (Resolution MEPC.377(80), para 3.5.1).  There arises a need for legal clarity to determine the homogenous and simultaneous application of these principles in the international shipping sector. 

The Revised Strategy demonstrates stronger reliance on the principle of equity and CBDR-RC for implementation of its goals. It seeks to reach the ambitious goal of net zero by mid-century by specifically accounting for different national circumstances, (Resolution MEPC.377(80), para 3.3.4) much in line with the language adopted in Glasgow Climate Pact adopted by the Conference of Parties established under the UNFCCC (FCCC/PA/CMA/2021/10/Add.1, para 32). Further, the Revised Strategy promotes a “just and equitable transition” (Resolution MEPC.377(80), para 2). While the terms “just and equitable transition” have not been defined or determined, the Revised Strategy has clarified the goal for implementing such transition to have an impact of leaving “no country behind” (Resolution MEPC.377(80), para 5.3). As a first step in realisation of the same, the Revised Strategy calls for impact assessment of IMO GHG reduction measures on States, with particular attention to the needs of developing countries, in particular Least Developing Countries (LDCs) and Small Island Developing States (SIDS) (Resolution MEPC.377(80), paras 4.10-4.14). Moreover, to tend to such special needs, it encourages supportive measures through continuous and enhanced partnerships, technical cooperation, capacity-building activities and technology cooperation (Resolution MEPC.377(80), para 5).

The IMO has been active in rolling technical assistance for GHG emission reduction in the sector, including through its in-house Technical Cooperation Programme, establishment of a GHG Trust Fund, Global Maritime Technology Cooperation Centres, in addition to projects run with the assistance of other IMO Member States, such as Norway, South Korea and Saudi Arabia. However, these programmes are based on voluntary cooperation and initiation among the IMO States.

In contrast, the economic measures considered as a part of the IMO GHG emissions reduction measures are to accrue a mandatory character. The deliberations at the 81^st Session of the MEPC suggest that the economic measures are proposed to be either in the nature of a pre-determined levy on the ship’s GHG emissions or through trade of excess or surplus emission units by ships to provide flexibility to ships with higher than required GHG Fuel Intensity (MEPC 81/16, para 7.15). Divergent views continue to persist with respect to the specific terms of implementing and integrating these economic measures with the technical element of setting a goal-based GHG fuel Standard for ships (MEPC 81/16, para 7.17.4.2). Further, views also differ as to the mechanism and purpose for disbursement of the revenue generated from such proposed economic measures, either as rewarding ships with lower emissions or development or deployment of new technologies and fuels or for climate change adaptation and mitigation efforts in the vulnerable countries (MEPC 81/16, para 7.3.3). 

It is certain that the proposed economic measures “should effectively promote the energy transition of shipping and provide the world fleet with a needed incentive while contributing to a level playing field and a just and equitable transition.” (Resolution MEPC.377(80), para 4.5). This objective is reinforced by the ITLOS AO, which requires accounting the special interests and needs of developing countries for realising a just and equitable international economic order (ITLOS AO, para 328). Further, by manifestly finding existence of some elements of the principle of CBDR-RC in the obligation of assistance under Articles 202 and 203 of UNCLOS, the ITLOS AO has augmented the necessity for IMO’s decisions to facilitate assistance in favour the developing world (ITLOS AO, para 326). By synonymously using the terms “States with lesser capabilities” as a reference for the developing States and “States that are better placed” for developed States, (ITLOS AO, para 326), it becomes clear that the purpose of CBDR-RC as an “obligation of assistance” must be executed in acknowledgement of the contemporary inequalities in the capacity of States to meet environmental obligations. Moreover, the extent of such obligation of assistance is also clarified to be of a continuing nature, till the developing States are enabled in the long term “to set up their own programmes to counter marine pollution from anthropogenic GHG emissions.” (ITLOS AO, para 332). 

The ITLOS AO implicitly acknowledges the need for a level-playing field among nations with varying levels of ability and capacity to implement the IMO GHG reduction measures. Lacking consensus at present over the terms of the economic measures as a part of the IMO GHG reduction measures, the ITLOS AO forms a robust basis for developing maritime nations, particularly SIDS and LDCs, to assert in the upcoming MEPC deliberations that an economic measure must prioritise the “continuous” fulfilment of the obligation of assistance by the developed IMO Members States until a level playing field has been achieved. The factors that would contribute to determining the fulfilment of this obligation of assistance can only be derived from crystallising and connecting the purpose of these principles and the impact of each relevant IMO GHG Reduction measure.