Isra-Mart srl:Maersk: Global emissions deal is sink or swim for IMO

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Failure to secure some form of deal to help make new ships more carbon efficient could see the International Maritime Organisation (IMO) lose its status as the industry's guiding body, according to a senior executive at one of the world's largest shipping companies.

Jacob Sterling, head of climate and environment at Maersk, told BusinessGreen the UN body has to come away from a meeting in July with agreement on preliminary steps towards cutting shipping's carbon emissions or risk seeing its negotiating role supplanted by the UN's climate change secretariat, the UNFCCC.

"In July [the IMO] is discussing and trying to agree a global efficiency standard for new ships – it's a first step, it's not radical or highly ambitious," he said. "But it is make or break for the IMO if it wants to play a role in the future of shipping."

The IMO has overseen the slow progress of negotiations designed to agree how to reduce emissions from the sector, which account for about four per cent of global emissions and are predicted to increase exponentially as global trade expands.

However, the body denied that the outcome of July talks, known as MEPC 62, would decide its future.

"The Kyoto Protocol says that countries should work through the IMO to address shipping emissions and I don't see that changing," an IMO spokeswomen told BusinessGreen. "We hope to get some sort of agreement in July, but until we have that meeting its impossible to speculate. If nothing is agreed, other organisations may decide to take specific action, but we cannot comment on what they decide to do."

The EU has threatened to bring shipping into its Emissions Trading Scheme (EU ETS) from 2013 if a substantive deal is not agreed by the end of this year, increasing pressure on the IMO to move beyond technical improvements which do not address current vessels that could spend another 30 years on the ocean.

An IMO task force is meeting at the end of March to discuss potential market mechanisms, the outcome of which will be fed into the July talks.

Sterling insisted he was hopeful that some form of deal would be done in July, but insisted that ultimately a global agreement would be needed to stop individual regions implementing separate policies.

"The problem arises when there is one system in Europe, another in the US and a different one in Australia," Sterling said. "Then companies have to spend much too much time in administration rather than reducing CO2 emissions. We would like to see a global deal – a piecemeal approach all over the world would not be desirable."

Maersk ordered 10 new container ships this week that promise to substantially reduce emissions and fuel consumption, and Sterling is sure that the company's efforts to cut CO2 would see it profit from emissions regulations if applied globally.

"Regulations would be a benefit for us because we have already taken to investing to reduce CO2 emissions," he said. "With or without legislation it is good business for us to reduce costs and improve environmental performance... as bunker prices are high and continuing to rise."

In related news, South Korea, a country that also envisages demand increasing for energy-efficient, low-carbon vessels, today announced it would spend 300 billion won (£165m) over the coming decade to develop technology for "green" ships.

Maersk's order of 10 Triple-E ships, with an option for 20 more, from Korean firm Daewoo may prove the first of many orders for the country's seven shipyards after the government set a target of $50.9bn (£31.5bn) in shipbuilding orders this year, 35 per cent more than 2010.

South Korea's Ministry of Knowledge Economy added in a statement that two thirds of the new investment would come from government funds, with the remainder sourced from the private sector.