When some companies lobby for ambitious environmental policy and others against it, the larger ones usually win. New regulations for cleaner shipping in the Arctic and Baltic Sea show, however, that David can beat Goliath. Benjamin Hofmann explains how small green businesses can prevail in international environmental negotiations.
In the months ahead, shipping will become a bit cleaner – a change made possible by small green firms. They strongly influenced regulations adopted by the International Maritime Organisation (IMO) for two unique sea regions.
From summer 2023, a regulation requiring better wastewater treatment on passenger ships in the Baltic Sea takes full effect. The regulation will limit shipping’s contribution to toxic algae blooms that threaten marine biodiversity in this low-salinity sea.
Small green firms strongly influenced regulations adopted by the International Maritime Organisation (IMO) for two unique sea regions
In 2024, moreover, a ban of the dirtiest ship fuel will enter into force for parts of Arctic shipping. The ban on Heavy Fuel Oil will reduce oil pollution risks in pristine waters. It also seeks to limit air pollution emissions that accelerate warming and sea ice loss.
In the international negotiations of both regulations, competing business interests clashed. Companies with green interests supported ambitious regulation. Polluting companies opposed stricter rules.
In both cases, firms with green interests were smaller. Conventional reasoning suggests that polluters, because of their size, should have been more powerful. They should have been able to block clean shipping policy.
Indeed, observers think that big shipping companies and associations wield too much influence in the IMO. States that tolerate substandard shipping, so-called flags of convenience, are natural allies of polluter interests in the United Nations’ shipping agency.
Surprisingly, however, the smaller green businesses prevailed. My research shows that their influence resulted from their ability to prove the feasibility of ambitious environmental regulation. This proof broadened the coalition of countries supporting green policy.
A closer look into both cases reveals how David beat Goliath.
Equipment suppliers shaped the new Baltic Sea wastewater standards, which limit discharges of nutrients from passenger ships. Nutrients like nitrogen and phosphorus contribute to marine eutrophication and the spread of dead zones. The standards originate from the innovative technology developed by a few medium-sized suppliers of wastewater treatment systems.
In 2005, Finland proposed regulating nutrient inputs from ships internationally. Preparatory negotiations took place in the Helsinki Commission, the regional governance body for the Baltic Sea, and four years later its members submitted a regulatory proposal for negotiation to the IMO. In 2014, the London-based agency confirmed new nutrient limits for passenger ships in the Baltic Sea.
States supported ambitious regulation on nutrient discharge because of the expertise provided by equipment suppliers
In both organisations, the multi-billion dollar cruise industry opposed ambitious nutrient standards. These would have required more expensive on-board treatment equipment or discharge to port facilities. Major cruise flags supported the industry position, arguing that ambitious standards lacked technical feasibility.
Yet, the proponents of ambitious regulation gained more support throughout the negotiations. Finland convinced all Baltic Sea states that regional wastewater regulation should be stricter than elsewhere. Together with Norway, it also mobilised a razor-thin majority of states in the IMO to favour ambitious nutrient limits.
States supported ambitious regulation because of the expertise provided by equipment suppliers. In the Helsinki Commission, suppliers showed trial data confirming that ambitious standards were feasible, while in the IMO, two manufacturers then presented official type approval of new wastewater treatment systems. Proponents also reported that cruise companies were taking up the technology.
These proofs of feasibility turned the tide in favour of ambitious regulation. The new nutrient limits came into force in 2019/21 for new and existing ships, respectively. This summer, the last exemptions, for ships in transit to Russia, expire.
Shipping companies can be progressive forces too, as the ban of Heavy Fuel Oil in Arctic shipping illustrates. As a refinery waste product, this fuel can cause persistent pollution when spilled in cold waters. Furthermore, its use produces emissions of black carbon, an air pollutant that accelerates climate change.
Countries have been discussing the use of Heavy Fuel Oil in the Arctic on an international level since 2009/10. The Arctic Council, the forum for circumpolar cooperation, produced several studies about the problem. In 2013, the IMO member states still rejected the idea of a ban. After another long round of negotiations, however, they adopted a ban in 2021.
Major shipping segments with stakes in the Arctic took a reserved position regarding a ban. Switching to cleaner fuels would increase operational costs. This would render future trans-Arctic shipping and exports of Arctic resources less competitive, and would increase Arctic supply costs. Consequently, large flag states and two Arctic states argued that a ban threatened the viability of Arctic shipping.
A change in fuel use in the shipping industry persuaded countries that phasing out Heavy Fuel Oil, responsible for persistent pollution and black carbon emissions, was possible
Once again, however, the proponents of greener policy largely succeeded. Most Arctic and many non-Arctic countries eventually supported a ban. Negotiators accommodated the remaining concerns through a phased implementation with significant transitional exceptions. Still, the direction is set; and the ground was prepared by changing fuel use in a niche sector.
The international support for a ban followed a change in shipping practices. Expedition cruise companies were the first to phase out Heavy Fuel Oil and to call for a ban. Under mounting public pressure, other shipping companies and their business customers followed suit.
This change in fuel use persuaded countries that phasing out Heavy Fuel Oil was possible. The new ban will apply to parts of the fleet from summer 2024 and to all ships from 2029.
In both cases, green David was more influential than polluting Goliath. The expertise of green firms regarding feasibility outstripped material sources of lobbying power, such as size and money. These insights are relevant beyond shipping, especially for technology-intensive industries such as resource extraction, chemicals, and aviation.
The main implication for policymakers pursuing sustainability goals in these sectors is to strengthen their links with progressive companies. For this, better representation of green business in international environmental negotiations is crucial.
This blog post is based on recent research published in Environmental Politics and the Routledge Handbook of Marine Governance and Global Environmental Change.