Wary of EU move, shipping industry proposes additional global CO2 levy

Published 23:10 on September 6, 2021  /  Last updated at 23:11 on September 6, 2021  /  Americas, Asia Pacific, Carbon Taxes, EMEA, EU ETS, International, Shipping  /  No Comments

Leading shipping associations have proposed creating a global levy on emissions from ships, seeking a level playing field as the EU advances its plans to regulate the sector’s climate impact.

Leading shipping associations have proposed creating a global levy on emissions from ships, seeking a level playing field as the EU advances its plans to regulate the sector’s climate impact.

The International Chamber of Shipping (ICS) and Intercargo on Friday jointly proposed a mandatory levy based on all internationally-trading vessels exceeding 5,000 gross tonnage.

The resulting revenue would go into a climate fund to be used to deploy infrastructure to enable ports to supply cleaner fuels such as hydrogen and ammonia, according to the proposal.

“What shipping needs is a truly global market-based measure like this that will reduce the price gap between zero-carbon fuels and conventional fuels,” said ICS Secretary General Guy Platten said in a statement, which gave no detail as to where the levy should be set.

“The rapid development of such a mechanism is now a vital necessity if governments are to match actions with rhetoric and demonstrate continued leadership for the decarbonisation of shipping,” he added.

The proposal was submitted to the IMO, the UN’s shipping agency, which is due to discuss the industry’s climate impact at a meeting of its MEPC environment committee in late November.

The two industry bodies stressed that the levy should build on, but be additional to, a $2/tonne fuel charge to fund research and development into low-carbon shipping.

That R&D levy, which the industry groups also initially proposed, has wide governmental support and is expected to be signed off this year.

A group of tiny Pacific Island nations vulnerable to rising seas due to global warming has urged the industry to go much further, and proposed at the IMO a $100/tonne carbon levy from 2025, aiming to accelerate emissions cuts from the sector.

Notably, the ICS – which represents the world’s national shipowner associations and more than 80% of the merchant fleet – has proposed the additional levy following the European Commission’s July proposal to add shipping to the EU ETS.

The Commission wants to bring intra-EEA and half of the emissions of ships arriving and departing from the bloc – the equivalent of around 90 Mt of emissions a year – under plans that require sign-off by lawmakers in a process expected to take at least a year.

Under the plans, shipping emissions will be gradually phased in to the EU ETS, with operators required to surrender units for 20% of verified emissions reported for 2023, 45% for 2024, 70% for 2025, and 100% by 2026.

“ICS believes that a mandatory global levy based MBM is strongly preferable over any unilateral, regional application of MBMs to international shipping,” the organisation said.

“A piecemeal approach to MBMs (the EU ETS will only apply to about 7.5% of global shipping emissions) will ultimately fail to reduce global emissions from international shipping to the extent required by the Paris Agreement, whilst significantly complicating the conduct of maritime trade,” it added.

By Ben Garside – ben@carbon-pulse.com

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