While leading maritime nations like China, Japan and Korea work together with the IMO on global solutions, each country also has their own decarbonisation strategies which are likely to impact the industry going forward.
Public pressure to act on improving air quality and fighting climate change has pushed the Chinese government to announce ambitious GHG reduction targets. While some have called for China to move more quickly, the government has shown that when political and economic forces align, it can move very quickly to manage any challenge.
The Ministry of Ecology and Environment (MEE) acts as the national authority with joint oversight of trading activities with other national regulators. In September 2015, China designated its own Domestic ECAs (extending 12km from the coast in select areas) and announced a gradual implementation of requirements covering emissions of air pollutants SOx and NOx from ships. China’s DECAs do not apply to GHGs at present but establish a framework for future action. China is also in dialogue with the IMO to establish an ECA that would extend 200 km off the coast.
China’s Emissions Trading Scheme
In 2020, the Chinese government announced ambitious plans to become carbon neutral by 2060. While the mechanism for achieving this goal has not yet been released, China has introduced an Emissions Trading Scheme (ETS). First piloted by the National Development and Reform Commission (NDRC) in select regions in 2017, China’s national ETS started operating in 2021. The ETS applies mostly to the power and mining industries but may be extended to other sectors, including shipping, if China is to achieve a carbon neutral target by 2060. However, as with other countries in the region, China has expressed concerns over the extension of EU ETS to international shipping, having a strong preference for a global approach over regional approach.
2020 was an important year for climate ambition in Korea with the government announcing a “Green New Deal” and a net-zero target for 2050 tied to a commitment to speed up investment in clean technologies across the economy. In January 2021, the government announced plans to reduce PM (Particulate Matter) in ports by 60% in 2025 compared to 2017.
In September 2020, the South Korean Ministry of Maritime Affairs and Fisheries (“MOF”) introduced an air quality control programme that defines selected South Korean ports and areas as Emission Control Areas (ECAs). From 1 September 2020, speed limits were introduced and vessels at berth or quay will have maximum sulphur limits (0.1%). From 1 January 2022, all vessels operating within these ECAs will have to comply with sulphur limits and limits on speed. The programme does not yet apply directly to GHGs but establishes a framework for future action.
South Korea’s Emissions Trading Scheme
Launched 1 January 2015, South Korea’s ETS was East Asia’s first nationwide mandatory ETS. The scheme covers 685 of the country’s largest emitters, accounting for about 73.5% of national GHG emissions. It not only includes direct emissions of six GHGs it also covers indirect emissions from electricity consumption. At present, the ETS does not apply to shipping, but the ETS will play a critical role in meeting South Koreas 2030 NDC target of a 24.4% reduction (from 2017 emissions).
As the world’s third largest shipowning nation and a leader in maritime technologies, Japan’s actions on emissions reductions will be watched closely. In addition to setting ambitious national targets, Japan has played an important role in establishing global mechanisms, such as providing technical support to the IMO’s EEXI regulation, among other initiatives.
The Japanese government has announced plans to cut its 2030 emissions by 46% from 2013 levels, up from its earlier goal of 26%, to achieve carbon neutrality by 2050. In March 2020, Japan’s Ministry of Land, Infrastructure, Transport and Tourism (MLIT) together with technology partners, launched the "Roadmap to Zero Emission from International Shipping", a comprehensive strategy to reach IMO GHG reduction targets.
Japan’s Emissions Trading Scheme
While Japan pioneered “cap and trade” schemes in Tokyo (2010) and the nearby Saitama Prefecture (2011), these programmes do not yet apply to Japan’s shipping industry. It should also be noted that the government of Japan has expressed concerns over the extension of EU-ETS to international shipping, preferring a global approach rather than a regional approach.