Written by Ricardo Sanchez, Silvana Sanchez and Eliana Barleta, Article No. 56 [UNCTAD Transport and Trade Facilitation Newsletter N°86 - Second Quarter 2020]
Climate change has been on national governments’ and international agendas for some time now because of its undeniable consequences on the well-being and economic prosperity of the population, as well as on natural systems.
Maritime transport is essential to the global economy, transporting more than 80% of the volume of international trade and more than 70% of its value (UNCTAD, 2018). Ships’ emissions are key to reducing the impact of human activity on the planet, including activities related to international trade.
For instance, reducing air pollutants derived from the fuel used in shipping is relevant to improve shipping sustainability. The IMO makes this point clear: “The main type of “bunker” oil for ships is a heavy fuel oil, derived as a residue from crude oil distillation.
Crude oil contains sulphur which, following combustion in the engine, ends up in ship emissions. Sulphur oxides (SOx) are known to be harmful to human health, causing respiratory symptoms and lung disease. In the atmosphere, SOx can lead to acid rain, which can harm crops, forests, and aquatic species, and contributes to the acidification of the oceans”. In this context, the IMO's low-sulphur regulation, which came into force on 1st January 2020, was an important milestone.
The reduction of the carbon footprint is another crucial point to improve the sustainability of the sector. In this sense, different initiatives have been implemented to reduce greenhouse gas (GHG) emissions from ships, mainly under the auspices of the International Maritime Organization (IMO). The adoption, in April 2018, of the IMO initial strategy for reducing GHG emissions was a key milestone. The strategy aims at reducing total annual GHG emissions from ships by at least 50% by 2050, compared with 2008, by combining quantitative reduction targets through 2050 and a list of possible measures in the short, medium, and long term.
In order to develop specific reduction and mitigation actions at the international, regional, national, and local levels, understanding the magnitude of emissions is very important. This article, based on prior research findings by the authors, presents a methodology for measuring CO2 emissions and its application to several Latin American countries. The findings also complement an earlier article in UNCTAD’s Transport and Trade Facilitation Newsletter on the role of flag states in decarbonizing shipping.
Aware of the importance of quantifying CO2 emissions from international maritime trade, the authors published in January 2020[i] a documented methodology for calculating CO2 emissions from shipping for a representative sample of exports (in volume) of eight Latin American and Caribbean countries, equivalent to 82% of total regional exports[ii]. This calculation methodology was subsequently applied to imports, with a sample accounting for almost 60% of the regional imports.
The sample for each country was constructed considering the main exported and imported products (arranged in descending order by volume in tons), together with the different pairs of origin and destination ports, assigned according to the type of good. The goods were classified using the 2007 Harmonized System (HS) at the four-digit level.
Quantifying emissions involves complex calculations. This is because of the different variables and factors that determine the total emissions, for instance the great variety of vessels of different specialties, sizes and engines, sea routes, navigation conditions, among others. Some of this information is not easily accessible and would be essential for the exact calculation of emissions. In view of this, the authors have proposed a methodology[iii] based on minimum emissions, which considers the following criteria:
After selecting the products, the most frequently used vessel was determined considering the type of cargo, and vessel size was determined considering the ports used.
For each shipment combination, the largest ports on both sides (exporting and importing country) were considered, according to their specialization.
For the selection of routes between pairs of countries and commodities, the combinations with the shortest maritime distance were considered, and in the case of direct services or with stops, direct services were chosen.
The exports of the selected countries are predominantly commodities. The combination of imported and exported goods of greater volume in each country of the region consists mainly of bulk cargo, with a low proportion of containerized cargo. In other words, the sample contains mostly routes involving direct services.
Only international shipping was considered: domestic cabotage, domestic transport services and river transport were not considered in the study.
The calculation only includes the vessel voyage, i.e. the main navigation route, so it does not consider short-range emissions, nor emissions from waiting times to dock, loading, unloading and manoeuvres.
The main objective of this study is to generate a reflection on emissions using the data available. In order to improve the methodology to reach accuracy (or a better approximation) in emissions, additional data is needed, which could be collected through AIS or via terminals and shipping companies.
Finally, it is important to mention that for this study the calculations account for 70% of the total international trade of Latin American and Caribbean countries.
Calculations of CO2 emissions from exports and imports of Latin America
In order to calculate cargo volumes for each vessel, seaborne[iv] exports and imports were counted in tons for 2017. These included mainly grains, minerals (especially iron and coal), oil, chemicals and fertilizers transported, via dry bulk carriers, to the following countries: Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru and Uruguay. Mexico presents a greater proportion of manufactured products, especially those related to the automotive industry, which are transported by containers.
The representativeness of total cargo exported and imported for each of the selected countries ranges from 56.5% to 78%, depending on the diversity of the countries' trade profile. Imports are generally more diversified, so the samples are smaller than in the case of exports. In general, the largest volumes imported by sea consist of minerals, grains, chemicals, and fertilizers.
The resulting CO2 estimations are shown in the table below. For each country in the sample, the tonnage and share of emissions by country in total emissions from international shipping is estimated, having as a reference 2018 data, in which shipping emitted an estimated 870 megatons of carbon dioxide (MtCO2) (value illustrated in columns 2 and 4 of the table below).
Co2 emissions from international shipping
Applying this methodology to exports, we observed that more than 1,160 million tons of products transported by ship from eight Latin American and Caribbean countries in 2017 generated about 24 million tons of CO2 equivalent, representing approximately 2.76% of the 870 million tons emitted by international shipping over a year, according to the latest known global estimate (2019). In the case of imports, 311 million tons transported generated about 6 million tons of CO2 equivalent, representing approximately 0.71% of the emissions from international maritime transport. The volume of whole Latin America and the Caribbean maritime trade in 2017 was 18.6% of the world maritime trade volume.
This methodological approach allows estimating CO2 emissions. However, the authors assume that this is a "minimum" estimate, since it does not include in the calculation, emissions related to the stay at the port, fuel consumption on departure and arrival, or those of other engines on board the ships, among others. Although improvements to the methodology are on-ongoing, these findings are very pertinent at a time of growing awareness about the need for increased environmental protection.
Two complementary and inter-related reflections are worth exploring in connection with avenues to significantly reduce emissions from international shipping.
The first one is about the urgent need to improve international regulation. Economic measures, such as technical and economic regulations (including tax instruments -such as a carbon tax- and design of incentives), must be accompanied by industry and science efforts to point out the "clean" technologies that are most effective to achieve decarbonization. Efforts to reduce transport emissions will be the result of convergence among different actors that are part of the whole supply chain. The role of the International Maritime Organization, other international agencies and all governmental and non-governmental actors involved in shipping activity, is central to these objectives.
The second one is about defining responsibility for emissions. Relevant questions include: Who is responsible for taking measures to reduce emissions? Is it the exporting country (the one emitting CO2 directly)? or is it the importing country (the one buying the goods associated with those CO2 emissions)? By tracking the "consumption emissions" (CO2 emissions from imports) it is possible to explain, to some extent, carbon transfers associated with the decline of manufacturing in developed countries that occurred in recent decades. It is worth noting that consumption, like ship emissions, is difficult to quantify and attribute to cargo as values vary, depending on the use of the ship, as well as on the repositioning voyage, which may be partially or totally empty. In other words, the same journey may generate different GHG per unit of cargo transported.
Further work is needed on measures that would significantly reduce emissions from international shipping. This is even more relevant in the current context of public health, deep economic and social crisis, resulting from the COVID-19 pandemic. Post-pandemic economic recovery presents challenges and opportunities that need to be analysed. Since a recovery that does not consider environmental effects will lead to a much greater climate crisis, post COVID-19 recovery strategies must consider their impact on carbon emissions. Our study aims at contributing to this endeavour.
[i] Sánchez, Ricardo J; Barleta. Eliana and Sánchez, Silvana (2020). “Towards the decontamination of maritime transport in international trade: methodology and estimation of CO2 emissions”. FAL Bulletin 373. January 2020. ECLAC, United Nations.
[ii] Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, and Uruguay.
[iii] The authors are grateful for the support and advice received from captains and maritime executives who kindly answered the technical questions from the researchers
[iv] The information is taken from the ECLAC International Transport Database (BTI), which provides information on the physical volume of exports and imports by mode of transport. This database has not been published yet.
Contact the authors:
Ricardo J. Sánchez | Senior Economic Affairs Office | ECLAC | [email protected]
Silvana Sánchez Di Domenico | consultant | ECLAC | [email protected]
Eliana P. Barleta | consultant | ECLAC | [email protected]
*The authors wish to express their appreciation and gratitude to Rodolfo Sabonge for his invaluable initial contribution.