Annex 10
Possible impacts of MBMs on Indias shipping sector and trade
In MEPC 61/5/19 India believes there should
be no mandatory requirement on developing
countries for reducing greenhouse gas emissions
due to their need to pursue social and economic
development. Forty per cent of Indias population
still lives without electricity and the efforts to
remedy this will increase energy use and thus
emissions. India asserts that the country already
has two national market based measures to curb
greenhouse gas emissions.
Carbon tax on coal to fund clean energy
Perform, Achieve & Trade (PAT) mechanism
for energy efficiency of fossil fuels
Indias assessment of reducing greenhouse gas
emissions notes that the emission intensity of the
countrys GDP declined by more than 30 per cent
during the period 1994-2007 and could potentially
reduce to 20-25 per cent between 2005 and 2020.
Prior to the adoption of EEDI and SEMMP, India
supported IMOs work but believed it should
be applied on the principle of common but
differentiated responsibility and not be imposed
mandatorily on non-Annex 1 countries.
India has been concerned about the introduction
of an MBM which would disadvantage developing
countries. India has therefore undertaken a
44 GSF briefing note on maritime emissions
study on the possible impacts of MBMs on Indias
shipping sector and trade. Ninety five per cent
of the countrys trade by volume moves by sea.
More than 50 per cent of the Indian fleet is over
20 years old and the average age of the fleet is 17
years. India believes that MBMs could impact on
freight rates, the export/import prices of essential
commodities due to bunker fuel rising costs, place
burden on end consumers and possibly even
increase the countrys ghg emissions. The study
analysed the impact on capeside iron exports
from India to China, imports of coal to India from
Australia and imports of crude oil to India from
Saudi Arabia. The study establishes that freight
rates would rise.
Change in Corresponding
Commodity bunker fuel change in freight
prices rates
Iron ore +10% +13.3%
Coal +10% +15.4%
Crude oil +10% +6.4%
India concludes that trade would be adversely
impacted, there would be an inequitable burden
on Indian consumers, which is against the CBDR
principle, and consumers may therefore resort to
poor quality high ash content coal leading to more
ghg emissions.