Scope of sector
The IPCC GHG inventory guidelines divide shipping into international navigation, domestic navigation and fishing (IPCC, 2006). It defines international shipping as “journeys that depart in one country and arrive in a different country”, while domestic shipping includes “journeys from ports to ports within the same country”. International shipping is responsible for most emissions (87% in 2017) (IMO - MEPC, 2020a). Data incorporating both international, domestic shipping and fishing is often referred to as ‘total shipping’.
Our assessment is of international shipping only and all references to shipping should be taken to mean ‘international shipping’ unless otherwise stated.
Emissions from domestic shipping and fishing are considered as part of national totals and are included in the assessment of individual CAT countries. However, in its 4th GHG study, the IMO introduced a new method to assess international shipping emissions – voyage-based as opposed to the historically used vessel-based method. While voyage-based tends to be more aligned with IPCC guidelines, this represent a reduction of around 200 MtCO2 emissions which should be accounted by countries in their national inventories. There is thus the need to coordinate emissions reporting between countries and the IMO to ensure there are no gaps in emissions coverage.
Our analysis is limited to CO2 emissions, in line with the CO2 carbon intensity target of the IMO and which represents the lion’s share of emissions. In 2018, 70-87% of emissions for total shipping were CO2 depending on the accounting methodology used (voyage-based or vessel-based) (IMO - MEPC, 2020a).
International shipping is also a source of methane and N2O emissions. Among the non-greenshouse gases, Black carbon is the second largest contributor to climate change emissions from shipping after direct CO2 emissions, accounting for 7% of total MtCO2eq in 2018 (IMO - MEPC, 2020a).
The CAT derived its historical emissions data for the period 1990 to 2018 from the different IMO GHG reports (IMO - MEPC, 2020a; IMO, 2009; Smith et al., 2014).
We use data from the IMO 4th GHG study for years 2012-2018 (voyage-based approach), extended back to 1990 using growth rates from the IMO 3rd GHG study (2007-2011) and the IMO 2nd GHG study (1990-2006) (IMO - MEPC, 2020a). We use the estimate based on the voyage-based approach from the IMO 4th GHG study for the year 2008.
To estimate emissions for 2019 and 2020, we relied on trade volume data from the WTO and international passenger arrival data from the UN World Tourism Organization (UNWTO) as proxies. We assume that share of merchandise transport and passenger emissions follow their historic trend of 91% and 9% (ICCT, 2017). For 2019 and 2020 trade-related emissions, we use as proxy for the yearly change in trade volume reported by the World Trade Organization (WTO) which was +0.2% in 2019 and a 5.3% drop in 2020 (WTO, 2021). For passenger-based emissions, we use for 2019 data year the last five years average and for 2020 as proxy the tourist arrivals UNWTO drop in 2020 of 73% below 2019 levels. While the UNWTO data is for all international travel, other research supports the general trend of a larger and longer impact on passenger travel than other maritime transport. (March et al., 2021)
Methodological considerations: Voyage vs Vessel based approaches
In its 4th GHG Study, the IMO presents two methodology approaches to reporting historical emissions: one based on the type of vessel and the other based on voyage of the ship. The report puts forward three key arguments in favour of using the new voyage-based approach and invites the IMO members to reconsider the targets’ base year: the voyage-based approach is aligned with IPCC guidelines, it is closer to top-down estimates such as the IEA data and the vessel-based approach have overestimated international shipping emissions allocating emissions by type of ships which could have had also domestic travels. In this assessment, we have used the voyage-based historical emissions to ensure consistency with our country analysis, which reports GHG emissions following IPCC guidelines. Historically, the IMO has used the vessel-based approach and it remains unclear if the IMO will fully transition to this new methodology and update its targets using these new estimates or keep the baseline as evaluated in its 3rd IMO GHG study.
Carbon intensity target
Under the Initial Strategy, IMO member countries have agreed to cut the carbon intensity of the shipping fleet by at least 40% below 2008 levels by 2030. In its June 2021 meeting, the IMO was set to decide on how is ‘carbon intensity’ defined with two options on the table:
- Demand based: the amount CO2 emitted per each ton of good per nautical mile (gCO2/t-nm) – also called EEOI (Energy Efficiency Operational Indicator)
- Supply based: the amount of CO2 per capacity of carriage (deadweight) per nautical mile (gCO2/dwt-nm) – also called AER (Annual efficiency ratio). The ICCT estimates that the latter (AER) would result in less actual emissions by 2030 than the EEOI.
At the MEPC76 (June 2021 meeting) the IMO decided on a 2% yearly carbon intensity reduction between 2019 and 2039 which would result in emissions reduction aligned with the supply-based approach (AER). We have thus estimated the 2030 carbon intensity based on the AER metric using the ICCT methodology: we applied the 40% reduction target to the carbon intensity in 2008 as reported by the IMO 4th Study of 17 gCO2/tnm using the AER metric equivalent in EEOI metric as described by the ICCT (ICCT, 2021). We estimated the projected carbon intensity under current policy projects (CPP max and min) by 2030 using the EEOI metric and applied the ratio between the CPP carbon intensity and the resulting carbon intensity aligned with the 40% target to estimate the level of emissions by 2030.
To estimate the resulting emissions from the 2050 carbon intensity target (70% reduction) we have applied a 70% reduction to the EEOI based 2008 carbon intensity and use projected transport work from the IMO 4th Study consistently from the scenarios used for the current policy projections max and min (IMO - MEPC, 2020a).
The 2050 target applies to all GHG emissions (excluding black carbon); however, we calculate to CO2 emissions only as this is the basis of our rating system. In order to reflect the uncertainty on the choice of the methodology to report historical emissions (voyage-based or vessel-based), we provide a range based on each of these methods as it is yet unclear with the IMO will re-evaluate its baseline or not (IMO - MEPC, 2020a; Psaraftis & Kontovas, 2021).
Current policy projections
Our current policy projection is based on a selection of the scenarios considered in the IMO 4th GHG study. The Study provides a range of 24 scenarios. While the study designates these projections as ‘BAU’, it defines BAU as ‘no new regulation will be adopted for shipping that has an impact on emissions or energy efficiency’. We thus understand it as including energy efficiency measures implemented such as the Energy Efficiency Design Index (EEDI) and the Ship Energy Efficiency Management Plan (SEEMP).
The IMO executive summary provides emission projections from six out of these 24 scenarios for their emissions projections, based on two different methods to project transport work. We select the highest and lowest scenarios based on the logistic approach as a base for current policies projections, namely the SSP2_RCP26_L, SSP4_RCP26_L and OECD_RCP26_L (IMO - MEPC, 2020a). The IMO reports indicates that SSP1 and SSP5 scenarios rely on very optimistic GDP thus present more prominently OECD, SSP2, SSP3 and SSP4 scenarios.
To estimate the impact of the pandemic on near-term emissions, we continued to rely on projections from the WTO and UNWTO.
To estimate trade-related emissions, we use as proxies the WTO projections for changes in trade volume: 8% growth in 2021 and a 4% growth in 2022 (WTO, 2021). 2023 data year is projected based on the growth rate of the IMO 4th Study.
We developed two scenarios to estimate passenger transport (cruise/ferries) emissions. For our low emissions scenario, we used the lower bound of UNWTO tourist arrivals in 2021 (a 67% drop compared to 2019 levels) and then assumed a slower return to 2019 levels by 2023. For our high emissions scenario, we used the upper bound of UNWTO tourist arrivals in 2021 (a 55% below 2019 levels) and then assumed a faster return to normal (2019 levels) in 2022.
Emissions from 2023 or 2024 (depending on the scenario) to 2050 are calculated using the growth rates in the pre-COVID current policy projections from the IMO 4th study as outlined above.