The International Chamber of Shipping has put forward a proposal for a global levy on carbon emissions from ships, in what would be a first for any industrial sector. The organisation presented a submission for this to the UN on Friday. It is to accelerate the uptake and deployment of zero-carbon fuels.
According to papers handed to the International Maritime Organization (IMO), the UN’s regulatory body on shipping, the levy would be based on mandatory contributions by ships trading globally, exceeding 5000 gross tonnage, for each tonne of CO2 emitted. The money would go into an “IMO Climate Fund” which, as well as closing the price gap between zero-carbon and conventional fuels, would be used to deploy the bunkering infrastructure required in ports throughout the world to supply fuels such as hydrogen and ammonia, ensuring consistency in the industry’s green transition for both developed and developing economies.
Shipping is responsible for approximately two per cent of global carbon emissions and the IMO has recognised the need for urgent action to decarbonise. The industry is desperate to see zero-carbon ships brought to the water by shipyards by 2030. However, at current rates of production, zero-carbon fuels are not commercially available at the scale needed for the global fleet. The carbon levy is intended to expedite the creation of a market that makes zero emission shipping viable.
Fuels made available globally
The Fund would calculate the climate contributions to be made by ships, collect the contributions, and give evidence they have been made. ICS hopes that it would also support new bunkering infrastructure, so that new fuels, when developed, can be made available globally and from as many ports as possible.
To minimise any burden on UN member states and ensure the rapid establishment of the carbon levy, the framework proposed by industry would utilise the mechanism already proposed by governments for a separate USD 5 billion R&D Fund to accelerate the development of zero-carbon technologies, which the IMO is scheduled to approve at a critical meeting in November.
‘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,’ says Guy Platten, secretary general of ICS, which represents national shipowner associations and over eighty per cent of the merchant fleet. ‘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. There’s no question that improvements in technology can enable the transition to zero-emission shipping. However, huge leaps must still be taken if we’re to achieve the readiness levels needed for deployment at scale. This includes building the necessary infrastructure to support such as transition.
ICS believes that a mandatory global levy based MBM is strongly preferable over any unilateral, regional application of market-based measures (MBMs) to international shipping, such as that proposed by the European Commission which wishes to extend the EU Emissions Trading System to international shipping. A piecemeal approach to MBMs, (the EU ETS will only apply to about 7.5 per cent 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.
The levy based MBM, which is co-sponsored by the trade association for bulk carrier operators, Intercargo, comes in addition to an industry and government proposed USD 5 billion R&D fund. The R&D fund, of a mandatory USD 2 levy per tonne on marine fuel, would be used entirely to fund the research and development of alternative zero-carbon fuels and propulsion systems. ICS has called for this fund to be approved at an upcoming pivotal meeting of the IMO in November this year.