The Potential and Limits of Environmental Disclosure Regulation: A Global Value Chain Perspective Applied to Tanker Shipping

Abstract

Exploring how transnational environmental governance and the operation of global value chains (GVCs) intersect is key in explaining the circumstances under which mandatory disclosure can improve the environmental footprint of business operations. We investigate how the governance dynamics of the tanker shipping value chain (a major emitter of greenhouse gases) limits the effectiveness of the European Union (EU) monitoring, reporting, and verification (MRV) regulation, which mandates the disclosure of greenhouse gas emissions for ships calling at EU ports. Although MRV seeks to help shipowners and ship managers save fuel and reduce emissions, it does not address the complexity of power relations along the tanker shipping value chain and currently cannot disentangle how different actors influence the design, operational, commercial, and ocean/weather factors that together determine fuel consumption. In particular, the EU MRV neglects to reflect on how oil majors exert their power and impose their commercial priorities on other actors, and thus co-determine fuel use levels. We conclude that, in its current form, the EU MRV is unlikely to lead to significant environmental upgrading in tanker shipping. More generally, we argue that regulators seeking to facilitate environmental upgrading need to expand their focus beyond the unwanted behaviors of producers of goods and providers of services to also address the incentive structures and demands placed on them by global buyers.

Maritime governance after COVID-19: how responses to market developments and environmental challenges lead towards degrowth

“…Shipowners rather than users are arguably the right actor to target, since they order the vessels and choose the parameters, whereas increased fuel prices or port dues target the users of existing ships (Poulsen et al 2021 ). Other options such as flag country or countries with the most port traffic are possible, yet the analysis of Selin et al ( 2021 ) reveals that using country of beneficial ownership produces the most equitable result, allocating increased emissions to OECD countries.…”

A Nice Tailwind: The EU’s Goal Achievement at the IMO Initial Strategy

“…In 2015, the EU adopted the MRV Regulation (Monitoring, Reporting and Verification) to track the fuel consumption of ships docking in its ports. Poulsen et al (2021) note that the IMO then adopted its own global fuel data collection system in 2016 as a response to the MRV. This fits with larger work on the EU's ability to sets standards at the international level via internal legislation, which Bradford (2020) refers to as the "Brussels Effect."…”

“…Despite this complexity, from 2011 to 2014, the MEPC took a series of decisions mandating increased efficiency standards for newly-constructed vessels and efficiency management plans for existing vessels (Joung et al, 2020). The aforementioned data collection system was agreed upon at MEPC 69 (2016) in order to track fuel consumption, as a first step towards emission reduction (Poulsen et al, 2021).…”

“…However, unilateral threats did not appear to play an irrefutable role in the EU achieving its objective at MEPC 72, though several implicit references came up. Nonetheless, the EU does have a successful track record of using threats to achieve its objectives at the IMO (Poulsen et al, 2021;van Leeuwen & Kern, 2013). Thus, it is possible that the inclusion of shipping in the ETS could spur international action, as evidenced by the shipping industry's proposal of $5 billion in research funding for decarbonization following the European Green Deal announcement (Psaraftis & Kontovas, 2020).…”

Voluntary Reporting in Decarbonizing Container Shipping: The Clean Cargo Case

“…The question that remains to be answered is whether the shippers and forwarders are in a position to incentivize reduction of air emissions from containerships. Poulsen et al argue that the power relations between actors in the global value chains have a decisive impact on the environmental footprint of shipping [33]. In relation to the tanker shipping that they studied, they suggest directing attention to the powerful cargo owners.…”