Charting the Course: Global Pressure Mounts for Shipping Sector’s CO2 Emissions Accountability

By Kate Abnett

BRUSSELS, March 18 (Reuters) – The global shipping industry is facing increased pressure as the European Union, Canada, Japan, and climate-vulnerable Pacific Island states, among 47 countries, rally support for a charge on the sector’s greenhouse gas emissions, as per documents reviewed by Reuters.

This push, outlined in proposals discussed at an International Maritime Organization (IMO) meeting, has garnered a combined 47 backers advocating for a levy on every tonne of greenhouse gas produced by the industry.

The momentum behind this idea has more than doubled since last year, now with support coming from 47 nations, a significant increase from the 20 countries that publicly supported such a carbon levy at a French climate finance summit.

Rising Support and Opposition

Advocates argue that implementing a policy of this nature could generate over $80 billion annually in funding. This capital could then be channeled towards the development of low-carbon shipping fuels and assisting developing countries in their transition efforts. On the other side of the spectrum, opponents like China and Brazil are concerned that such a move could adversely impact trade-reliant emerging economies.

The battle lines seem drawn as countries engage in fierce negotiations to sway the opinion of others, particularly those yet to firmly take sides on the issue. While the IMO generally operates by consensus, important decisions can also be made by majority support.

Although the IMO had previously agreed on a 20% emissions reduction by 2030 and net zero emissions by 2050, discussions last week revealed a rift among nations regarding the implementation of an emissions price.

Albon Ishoda, an IMO delegate representing the Marshall Islands, underlined the necessity of a levy to meet the organization’s goals, expressing concerns about potential backtracking if the initiative fails to materialize.

Rationale and Logic

Given that shipping is responsible for nearly 3% of global carbon dioxide emissions, a figure expected to rise without stringent pollution control measures, the urgency for action cannot be overstated. A proposal from the Marshall Islands and Vanuatu suggests a levy of $150 per tonne of CO2, a move that, according to researchers, could make investments in low-carbon ammonia-fueled systems economically viable compared to conventional vessels.

Vanuatu’s climate minister, Ralph Regenvanu, emphasized the need for a swift and comprehensive transition, stating that half-hearted solutions will not suffice to address the challenges at hand.

Another proposal from the EU, Japan, Namibia, South Korea, industry group the International Chamber of Shipping, and others advocates for a dual approach involving a shipping emissions price along with a global emissions standard for maritime fuel.

Striving for Consensus

While China, Brazil, and Argentina have voiced concerns against a CO2 levy, proposing an alternative global fuel emissions intensity limit with fines for breaches, it is evident that finding common ground remains a top priority for member states who seek to navigate potential fragmentation and regulatory chaos that could result from individual countries setting their own standards.

The EU has indicated its readiness to include more international shipping emissions in its local CO2 market should the IMO fail to establish a global emissions price by 2028.

Amidst ongoing deliberations, questions loom over the administration of such a charge and the allocation of its proceeds, highlighting the complexities of the issue. A potential compromise could see the IMO focusing on designing a carbon price primarily aimed at curbing emissions rather than as a revenue-generating tax.

Canada’s proposal suggests agreeing on the core design of an emissions price while postponing decisions on revenue allocation, a move aimed at averting the stumbling block that has derailed previous discussions.

Despite disagreements over specifics, there remains cautious optimism that a mutually beneficial agreement can be reached. Ishoda of the Marshall Islands aptly captured the sentiment by noting the tendency to stall progress on trivial matters, calling for a concerted effort to move forward collectively.

(Reporting by Kate Abnett; Additional reporting by Jake Spring, Jonathan Saul; Editing by Jan Harvey)

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