The IPCC Report and its impact on shipping

News / / London

In April 2022, the Intergovernmental Panel on Climate Change (IPCC) published the Working Group III report on “Mitigation of Climate Change”, the third instalment of the IPCC’s Sixth Assessment Report. This follows the Working Group I report on “The Physical Science Basis” and the Working Group II report on “Impacts, Adaptation and Vulnerability”.

What is the IPCC?

The IPCC is the United Nations’ body for assessing the science related to climate change. It was set up in 1988 to provide governments with regular assessments of the most comprehensive, rigorous and up-to-date scientific knowledge of climate change, its impacts and future risks and options for adaptation and mitigation.

What is the IPCC currently working on?

The IPCC is currently working on its Sixth Assessment Report (AR6) consisting of the three Working Group contributions, published in August 2021, February 2022 and April 2022 respectively, and a Synthesis Report due to be released in September 2022, in time for the first Paris Agreement Global Stocktake in 2023.

What are the three Working Groups reports?

  1. WG I – The Physical Science Basis: this is a comprehensive report on the most up-to-date physical science of the climate system and climate change. It demonstrates that climate change is now “widespread, rapid, and intensifying” with some devastating impacts already evident around the world. The WG I report provides that unless there are ambitious reductions in greenhouse gas emissions in this decade, limiting warming to close to 1.5°C or even 2°C will be beyond reach.
  2. WG II – Impacts, Adaptation and Vulnerability: this report considers the observed and projected impacts and risks from climate change, such as more frequent and intense extreme weather events, sea level rise, floods, droughts and deadly heatwaves, looking at the ecosystems, biodiversity and human communities at global and regional levels. The impacts and risks are analysed in terms of their damages, harms, economic and non-economic losses. The WG II report further covers climate adaptation options and considers the natural and human systems which are likely to be most vulnerable to climate change.
  3. WG III –Mitigation of Climate Change: this solution-oriented interdisciplinary report considers all aspects of climate change mitigation, including the sources of global emissions, the methods for reducing emissions and the options for removing greenhouse gases from the atmosphere, by reference to various sectors - including energy and shipping. The WG III report covers technical, financial and enabling policies that would allow measures to be adopted, but does not make recommendation on the mitigation strategy to be pursued.

Are the outcomes of the three Working Group reports relevant to the shipping industry?

All three reports, explicitly or indirectly, have an impact on the shipping industry.

  1. WG I – The Physical Science Basis: the “Physical Science Basis” report does not explicitly refer to the maritime sector, but its findings are clearly relevant to the industry. For example, the WG I report’s assessment of the negative impact of methane prompted the signing of the Global Methane Pledge at COP26, targeting to cut methane emissions. As a result, the LNG industry is under greater pressure to develop and implement technologies with no methane slip. The WG I report also envisages the reduction of black carbon emissions and this prompted the IMO during MEPC77 to adopt a resolution on voluntary use of cleaner fuels in the Arctic, to reduce black carbon emissions. However, more ambitious, immediate and deep emissions cuts are required in this decade to keep the possibility of limiting warming to 1.5°C alive and, as set out in the WG III report, the current IMO targets “fall far short” of meeting the Paris Agreement goal.
  2. WG II – Impacts, Adaptation and Vulnerability: the WG II report on “Impacts, Adaptation and Vulnerability” identifies a number of predicted scenarios which will have an impact on the shipping sector. The WG II report provides that the projected sea level rise and extreme weather are potentially going to significantly damage the ports infrastructure, with knock on effects on the global supply chain, with expected geopolitical and economical repercussions such as an increased piracy risk. Significant financial investments to adapt the port infrastructure will be required to avoid the worse consequences. The climate change might also result in changes in shipping routes, with potentially more incidents arising further to vessels navigating in unchartered waters. The WG II report further suggests – but without reaching a universal consensus on this – that a “transformational adaptation approach to address climate impacts on maritime activities and increase security would relocate ports, change centres of demand, reduce shipping distances, or shorten supply chains”.
  3. WG III –Mitigation of Climate Change: The WG III report indicates that decarbonisation of shipping will require improvements at different levels, ranging from efficiency (ie optimised vessel designs, mass reduction and propulsion system improvements) to additional CO2 emissions mitigation technologies and identifies alternative fuels options for shipping such as low-emission hydrogen, ammonia, biofuels, and other synthetic fuels. Overall, the WG III report provides that the IMO’s current emission reduction targets are not ambitious enough to meet the Paris Agreement targets and further provides that improvements to national and international governance structures, such as the implementation of stricter efficiency and carbon intensity standards, would facilitate the energy transition in the sector.

With reference to the energy sector as a comparison, the WG III report indicates that during the period 2010-2019 there have been sustained decreases in the unit costs of solar energy (85%), wind energy (55%) and lithium-ion batteries (85%). Against this background, the report make the point that policy packages have been (and can be) very effective in supporting prompt adoption and diffusion of low-emission innovative technology.

This is very interesting, but also feels overwhelming. Is there any positive news?

The UN described the WG I report as a “code red for humanity” and the subsequent WG II and WG III reports reiterated in very serious terms that immediate and deep emissions cuts are required to keep the 1.5°C Paris Agreement goal within reach. Even though the IMO current emission reduction targets are not considered to be ambitious enough by the IPCC report, the positive news is that zero-emission innovative technologies are available to ships already and - with the adoption of new policies, sufficient investments and a clear regulatory framework - immediate and deep emissions cuts could be achieved.

Whilst waiting for the IMO to set more ambitious emission reduction targets at global level, deeper emission cuts are already being introduced more locally. For example, the European Union “Fit for 55” package of legislative proposals, aimed at cutting emissions by at least 55% by 2030 and at ensuring the climate neutrality by 2050, is relevant to the maritime industry as it proposes – among others – to extend the Emission Trading System to shipping from 2023, to introduce a new FuelEU Maritime regulation from 2025 and to revise the energy taxation directive. Moreover, the introduction by the “Clydebank Declaration” of six green shipping corridors, set to be in effect from 2025, will enable the first movers to trial and prove technology and to reduce costs, create the systems and policies that are required, paving the way for others to follow. Hopefully this background will prompt the IMO to finally revise and adopt a revised GHG emission strategy at MEPC 80 (Spring 2023), as urged by the IPCC report.

Alberta Longanesi Cattani

Alberta Longanesi Cattani Senior Associate

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