By Nafesha Richardson
Introduction
The Caribbean’s maritime lifeline is under threat. As global efforts to reduce greenhouse gas (GHG) emissions intensify, the International Maritime Organization (IMO) is at the forefront of creating new strategies that could reshape the future of international shipping. For the Caribbean—a region where shipping is not just a means of transport but a cornerstone of economic survival—these negotiations are more than just a diplomatic exercise. They can determine the viability of shipping in the Caribbean for future generations.
This Caribbean Shipping Lanes SRC Trading Thoughts explores the high stakes involved in the IMO greenhouse gas (GHG) negotiations and why Caribbean states must be vigilant, proactive, and unified in their approach. It provides an overview of what is happening at the IMO, the importance of the Caribbean’s voice in international maritime policy design, key considerations for the region and concluding thoughts.
What is happening at the IMO to address GHG Emissions in Global Shipping?
The IMO is a United Nations (UN) specialised agency which regulates the global shipping industry, ensuring safe, secure, and efficient shipping on clean oceans. It serves 176 member states, 66 intergovernmental organisations (IGOs), and 85 international non-governmental organisations (INGOs). The IMO operates through five key Committees, including the Marine Environment Protection Committee (MEPC), which focuses on environmental issues, particularly pollution and greenhouse gas (GHG) emissions from ships.
The 2018 Initial IMO Strategy cemented the MEPC’s efforts with a 50% GHG reduction target by 2050. The 2023 IMO Strategy on Reduction of GHG Emissions from Ships builds on these foundations emphasising the need for capacity building, technical cooperation, and research, establishing a strong framework for the shipping industry’s transition to more sustainable practices. Importantly, the 2023 Strategy also recognises the need for a “just and equitable” transition that does not disproportionately impact or leave behind any nations, particularly small island states and least developed countries, and takes into account the impacts that the shipping industry has had on climate.
The importance of the Caribbean’s voice in international maritime policy design
Shipping in the Caribbean is marked by unique circumstances. Not only are Caribbean islands relatively close in proximity, many ports are small and lack modern infrastructure. Due to this, many ships spend an extended period of time in ports in comparison to being out at sea. As highlighted in a submission to the MEPC by five (5) Caribbean states, recent measures such as the Carbon Intensity Indicator (CII) have created operational concerns for ships in the Caribbean region. Due to the way that CII is calculated, long voyages are preferred because they mean fewer trips in a year, resulting in less time spent in port where the ship emits CO2 without adding to the miles counted in the CII formula. On the contrary, where voyages are short or include long wait times, as is the case in the Caribbean, ships would receive unfairly low CII grades, not due to any technical issues with the ship, but because of unique circumstances surrounding how trade is done. At the time of its design not many Caribbean states were at the negotiating table, and they did not have the technical capacity to influence the negotiations. This time around we have a chance to do things differently.
While there is no one clear definition for a “just and equitable transition”, UNCTAD has suggested that it involves a transition which is environmentally effective, procedurally fair, socially just, globally equitable, and technologically inclusive. Failure to meet these standards would only deepen existing inequalities.
Undoubtedly, the stakes in these negotiations are high. It is crucial that Caribbean nations are not only present but actively engaged in the negotiation process. As the adage goes, you do not get what you deserve—you get what you negotiate. For Caribbean states, it is critical that the region’s unique circumstances are meaningfully considered in the development and finalisation of the measures required by the 2023 IMO GHG Strategy.
Key considerations for the Caribbean region
- Vulnerability to Climate Change
The Caribbean is on the frontline of the climate crisis. SIDS in the region are particularly exposed to climate-related risks and are already facing unprecedented climatic events. In July 2024, Hurricane Beryl made history as the earliest category-5 storm in the Atlantic basin. Beryl brought devastation to Grenada, Carriacou, Petit Martinique, and St. Vincent and the Grenadines, particularly Union Island, Canouan and Mayreau in the Southern Grenadines. Although the SIDS only contribute 1% to global GHG emissions, local and regional efforts to reduce emissions contribute to global climate action, reducing the overall impact in vulnerable regions like the Caribbean. Given these risks, a revenue disbursement strategy that accounts for the region’s climate risks and readiness for transition, beyond just per capita income measures, is essential. Additionally, adopting a well-to-wake (WTW) approach for GHG Fuel Intensity (GFI) standards will ensure all environmental impacts of maritime activities are considered. These measures will address the Caribbean’s needs, supporting global climate efforts while safeguarding the interests of a region heavily dependent on shipping.
2. Shipping Industry Dependency
The Caribbean’s economic stability is deeply connected to the maritime industry, making the reduction of GHG emissions in shipping crucial. Shipping drives Caribbean trade and tourism, two key economic sectors. The cruise industry’s exponential growth, bringing millions of visitors and billions in GDP, and the nearly 24.5 million containers passing through Caribbean waters in 2020 highlight the industry’s importance. However, this dependence also further exposes the region to the indirect impacts of climate change, which could disrupt shipping routes, ports, and infrastructure, with severe economic consequences. Caribbean states must actively participate in IMO negotiations to advocate for emission reduction strategies that address climate risks while fostering a more resilient maritime industry. Strong regulations are necessary to ensure that Caribbean states, heavily reliant on shipping, are not disadvantaged by market-based mechanisms like trading units or pooling systems, which could worsen existing economic challenges.
3. Economic Challenges
The significant economic challenges which affect Caribbean states are another reason why our states should care. As the Inter-American Development Bank (IDB) reports, the Caribbean has made significant progress, bringing debt levels close to pre-pandemic figures. Considering these strides, it is important to ensure that GHG regulations in shipping do not exacerbate the Caribbean’s vulnerabilities to global economic shifts and climate-related risks. To this end, a universal levy is a critical economic measure which must be considered, ensuring that contribution by emitters is proportional. This is cemented by the IMO Comprehensive Impact Assessment (CIA). The CIA demonstrates that a levy is the most cost-effective and least disruptive policy solution for all nations, including developing countries, Small Island Developing States (SIDS), and Least Developed Countries (LDCs). With the polluter pays principle as its basis, these funds should be directed towards Just Energy Transition (JET) projects both in sector and out of sector. Importantly, a balance must be struck between incentivising a green transition and financially supporting the Caribbean’s wider sustainable development.
4. Opportunities for Innovation and Investment
The IMO’s 2023 GHG reduction strategy also presents significant opportunities for innovation and investment in a climate-resilient shipping industry. The region is well-positioned to overhaul traditional, inefficient systems and embrace new technologies that reduce emissions and improve operational efficiency. Through innovation and investment in infrastructure, Caribbean states can attract funding and partnerships aimed at developing climate-resilient infrastructure and connectivity. Modernised fleets and upgrades to port infrastructure are critical to guiding this transition. Investments should focus on establishing bunkering facilities for alternative fuels, retrofitting current vessels, and upgrading port infrastructure to support new fuel types and technologies. As highlighted in previous discussions by the SRC Trading Thoughts, these efforts can contribute to “equitable growth, resilience, and environmental sustainability,” ensuring that the Caribbean not only adapts to the changing climate and reduces the environmental impact of shipping, but also stimulates economic growth and job creation.
5. Fairness, Transparency, Inclusivity, Equity and Sustainable Development
The Caribbean’s active participation in IMO GHG negotiations is crucial for advancing Sustainable Development Goals (SDGs), especially Goal 13: Climate Action, which also supports other goals like Goal 14: Life Below Water and Goal 9: Industry, Innovation, and Infrastructure. However, sustainable development must be balanced so that it does not benefit one state at the expense of another. Measures should not strain the already limited administrative capacities of Caribbean states or create additional implementation challenges. Overly complex mechanisms can overwhelm smaller states, increasing disparities. To ensure fair distribution of benefits, a geographically diverse transitional committee should be established. This committee, operating under a strong governance structure, would design and manage fund allocation strategies, ensuring resources are distributed equitably and used effectively. It is essential that fairness, transparency, inclusivity, and equity are upheld throughout the IMO negotiations.
Concluding thoughts
As the IMO GHG negotiations progress, the decisions made today will echo across the Caribbean for generations to come. The region’s active involvement is not just necessary; it is imperative. The stakes are high, but so too are the opportunities for innovation, resilience, and leadership. Now, more than ever, Caribbean voices need to be heard in shaping global maritime policies that safeguard both the environment and the future of our nations.
Nafesha Richardson is a Fellow at the SRC, supporting Caribbean negotiators in IMO GHG emissions-reduction negotiations. The views expressed in this column are purely personal and do not represent those of the SRC and its partners.