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The shipping industry plays a very important part when it comes to international trade, seeing as it carries 90% of the international trade volume (measured in tonnes)[1][2]. Ships generally have a ‘green image’ seeing as ships emit less CO2 per ton-mile compared to air, rail, or truck transport (Smith et al. 2014). But due to its rapid growth and large scale, the shipping industry is still a major contributor to environmental change and damage[3]. The shipping industry contains several negative externalities such as air pollution, water pollution, noise pollution, and oil spills[4]. Ships are responsible for 3% of the world’s total greenhouse gas emissions ranking the industry at the same emission level as the country Germany[5]. If the industry carries on with a business-as-usual strategy their emission level is expected to increase 150-250% by 2050[6] . It has previously been estimated that it would be possible to reduce emissions by 75% per freight unit leading up to 2050[7]. Whether this still is possible is up to debate

Issues with environmental regulation[redigér | rediger kildetekst]

Environmental regulation concerning the shipping industry has been criticized for being inadequate, except for regulation regarding oil spills. When it comes to other environmental issues, such as green house gasemissions and invasive species, the regulatory process has been criticized for being notoriously slow[8]. The academic literature on regulation in the industry pinpoints four reasons why regulatory progress is being stalled: Low environmental visibility, poor interest alignment, a broadening scope of environmental issues, as well as growing regulatory fragmentation and uncertainty[9].

Despite the criticism, the international regulatory bodies have devoted noteworthy efforts towards identifying and creating efficient regulatory instruments in order to guarantee effective regulatory standards in the industry[10]. These endeavors reflect challenges often encountered in various domains of governance, where commercial and economic interests overshadow the "public interest," resulting in its detriment[11][12]. Because of this, the governance of the shipping industry may seem to be falling short of what is required of them when it comes to matters of public interest, such as maintaining a healthy marine environment and lowering greenhouse gas emissions[13]. In recent years, there has been growing concerns about the environmental impacts caused by the shipping industry from different stakeholders ranging from shippers and carriers[14]. Seeing as the situation is set to worsen as trade globalization intensifies, many shipping firms have taken the initiative to find ways to lessen the environmental damage of their operations while still enhancing their performance to help protect the environment[15].

Regulatory entities regarding environmental protection[redigér | rediger kildetekst]

The main regulatory body concerning the shipping industry is the International Maritime Organisation (IMO). The IMO’s mandate includes the promotion of environmental protection through a regulatory framework that aims to be “fair and effective, universally adopted and universally implemented”[8]. The IMO has launched 21 treaties initiatives with the objective to provide environmental protection[16]. These initiatives include conventions such as the International Convention for the Prevention of Pollution from Ships (MARPOL), the Ballast Water Management Convention (BMW), and the International Convention on Oil Pollution Preparedness, Response and Co-operation (OPRC). The MARPOL convention is one of the most significant conventions regarding international marine environmental protection[17]. Its purpose is to minimize pollution of the oceans including oil and air pollution. The MARPOL convention has since its adoption in 1973 been amended with the addition of several annexes[8]. The convention does however have some implementation issues due to the international nature of the shipping industry[18].

According to the shipping industry neither national or regional regulatory interference is wanted or needed. The sector considers the IMO as not only the best suited, but also the only organization that should regulate them[19]. This preference is due to the global nature of the industry: The introduction of regionally and nationally specified regulation would, according to the industry, lead to inefficiency in their operations as well as market distortion[19]. In accordance with this, the IMO has been criticized for conforming with the industry that it is supposed to regulate[20]. Due to the conformity-issues, the IMO has been criticized for lacking progress when it comes to the regulation of GHG-emissions. The lack of progress can however also be explained by the fact that the decision-making process in the IMO favors informal consensus-building over regular voting. This gives veto powers to members that are opposed to environmental policy. Major countries from the global south such as China, Brazil, and India are for example against the IMO pursuing a cap on shipping GHG-emissions, since they think it’s too early for the IMO to adopt such targets[21]. The shipping industry, and specifically the IMO, is embedded by traditional roots and a conservative mindset that plays a role in obstructing transitionary goals such as GHG reductions and other environmental protection initiatives[22].

Since the 1980’s the maritime governance regime slowly moved away from mainly being centered around the IMO. During the 1980s regional regulatory initiatives in the EU and its member states became of increasing importance. The new initiatives started due to an increasing dissatisfaction with the ambition level of the IMO, lack of enforcement of IMO standards, and lack of effective implementation[23][24]. These initiatives include the use of special areas in IMO Conventions, the adoption of the Paris Memorandum of Understanding (MoU) on Port State Control, the development of the European Union shipping policy domain, and the emergence of market-based initiatives by ports and cargo-owners[23]. These new initiatives create a new form of polycentric regional regulatory governance within the shipping industry that is more decentralized and based on cooperative interactions between stakeholders[23][25][26][27][28][29].

New private voluntary governance mechanism and regional regulation has recently evolved to fill out the regulatory gap from the IMO[8]. Both the EU and the US have for example increased regulation in their own respective territories[8]. The increase of numerous different transnational shipping standards can in the long run become a bigger challenge for the IMO, seeing as it will create an increasingly hybridized global regulatory landscape[8]. A central governance dilemma within the shipping industry is how to effectively combine private and public regulation in order to make shipping environmentally sustainable. The issue with this primarily stems from the fact that the IMO-based international conventions has been acknowledged as being ineffective to the point where it can be seen as a ‘maritime governance failure’[30]. Regulatory issues include inconsistencies in inspection practices, efficiency issues due to cross-national differences in resourcing and regulatory commitment, and difficulties with paper-based validation[31].

Fragmentation in the regulation[redigér | rediger kildetekst]

The shipping industry faces many unique challenges when it comes to managing and regulating environmental risks due to the industry’s global nature. These challenges involve high levels of regulatory fragmentation as well as a recurrent lack of regulatory coordination both within and across international, regional, and national regulatory bodies[32]. That the regulatory framework regarding the shipping industry is fragmented, means that there is ambiguous and/or overlapping jurisdictions that is associated with different challenges. These challenges include a lack of effective enforcement and monitoring, as well as inconsistent and/or unclear standards. Environmental challenges can consequently become under-addressed and under-regulated[28]. It has been argued, that in order to address the problem of fragmentation, unified regulation alone might not be sufficient. It may be required to develop adaptive measures that are better suited to their local contexts[33].  The current enforcement of environmental regulation in the shipping sector has been criticized for being insufficient. Because of this it can be argued that efforts should be made to strengthen the inspection and enforcement of the regulation as well as establishing a global monitoring system[34].

The growing fragmentation of the regulatory structure surrounding the shipping industry introduces a surplus of challenges and uncertainties to the industry’s business operations - instead of offering compliance options[8]. Regulatory uncertainty is especially problematic for the ship-owner’s investment decisions. Since the typical commercial lifespan of a ship is 25 years (find ref), ship-owners and carriers must take the regulatory uncertainty into consideration when selecting new ships and equipment. Because of this, the timing of the introduction of new regulation shapes the industry as much as the content of the regulation. The regulatory uncertainty slows down the process of raising environmental protection standards, because ship-owners and carriers are more wary of making investment in environmental improvements. Simultaneously, ship-owners themselves contribute to the regulatory uncertainty by keenly resisting regulatory changes[8]. Various environmental concerns are currently being examined for possible regulation within the IMO, but the issues remain largely unsettled. These unsolved matters introduce further complexity and uncertainty to ship-owners and carrier’s operations and investments[8].

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