Pacific Islands’ proposed carbon levy on shipping could be a lifeline for developing countries
Small Pacific Islands have proposed an ambitious universal carbon levy for the shipping industry that will hopefully not only accelerate a transition in that industry, but also help developing countries adapt to and mitigate climate-crisis events.
A lack of alternative zero-emission fuels and low commercial viability for green fuels in the maritime sector leave a gap for carbon pricing that could solve the sector’s slowed decarbonisation, which will bolster an appetite for those alternative fuels. One of the most ambitious proposed carbon pricings comes from the climate-vulnerable Solomon and Marshall Islands.
The carbon levy for the shipping industry remains a measure that progressive countries hope will finally be adopted, with its head rearing once again at the 79th Maritime Environment and Protection Committee, (MEPC) hosted by the International Maritime Organisation (IMO) in London.
The adoption of the Paris Agreement at COP21 in 2015 (which the Marshall Islands played a critical role in bringing to life) – ambitious commitments to protect the environment and limit surpassing global average temperatures beyond 1.5°C – left out progressive measures for the shipping and aviation industries.
With this knowledge and climate action gap, the Solomon and Marshall Islands drafted a proposal for the $100 per ton of emissions levy.
“[The carbon levy proposal] came out in 2015 and was presented to the [International Maritime Organisation] a few years later. It’s the most ambitious because the Pacific region is the most vulnerable, and they thought that someone had to do something,” Michael Prehn, Solomon Islands counsellor to the IMO, told Daily Maverick.
Other countries and organisations have put forward a carbon levy that has priced carbon way below what would drive countries to lowering their greenhouse gas emissions and push the shipping fuels market to alternatives.
The International Chamber of Shipping, a global trade association for ship owners and operators, suggested the industry be priced according to a ship’s fuel intensity. Japan had suggested $56 to $73 per tonne of CO2 for the year 2025 where the costs would benefit zero-emissions ships, with all ships paying the levy.
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Norway and Austria had proposed a market price of capital and trade, and cost compliance with standard respectively, where overcompliant ships would benefit and undercompliant ships would pay the levy.
Prehn said of the Pacific Islands’ $100 carbon levy: “This plan will remove carbon as much as Germany does; about 3% of the world’s total – it will do that by 2050; zero emissions by 2050!”
Slow to act
In an ideal situation, the next step would be for the growing support of the levy to be tabled, adopted into the International Convention for the Prevention of Pollution from Ships (Marpol), the shipping industry’s marine environment pollution prevention policy, and enforced to all ships.
After the Paris Agreement adoption and several red flags over the status of a biological collapse spurred by the climate crisis, the MEPC has yet to take ambitious steps to reduce its carbon output which contributes 3% to global emissions, almost the same as the African continent.
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History has shown that the IMO is a reactive body that will be pushed to take action when a devastating event shakes the industry; much of this has been with regards to the safety of the maritime industry. One could argue however, that the climate crisis is a devastating event, to which the industry contributes a great deal.
Daneiele Rao of Carbon Market Watch said more countries were on board with a fast-approaching deadline to decarbonise the shipping industry in a way that would best benefit the vulnerable.
“Climate-ambitious countries must keep the drumbeat going next week on the 2030 targets, and, if they are serious about just transition, support the $100 carbon levy proposal by the Marshall Islands and the Solomon Islands,” it said.
It comes as no shock, therefore, that while the agenda of MEPC79 seeks to develop a revised strategy on the reduction of greenhouse gas emissions in shipping, there is no mention of paving the way towards a carbon levy.
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Though the levy could potentially be tabled at the next meeting, MEPC80. This has been a consistent act when it comes to the IMO making decisions about climate action and the shipping industry, despite an acknowledgement of the urgency of the issue.
Albons Ishoda, ambassador of the Marshall Islands to South Korea, said in a briefing that everyone knows we need to be 1.5°C-aligned, but because some countries felt like the conversation was too related to the COP process, it was being pushed back.
“Our goal is to make sure that by 2030 we have a number; 50% [emissions reductions] by 2030,” said the ambassador, referring to pushing a fossil fuel-free agenda and the implementation of the carbon levy. “The way the discussions are going; everyone seems to be saying, ‘We’ll get to it!’ It doesn’t seem like it’s urgent yet.”
The funds from the levy would be reinvested into the sector to create technologies to help reduce carbon emissions, but also help developing countries in transitioning the role they play in the shipping industry.
He added: “For a country like the Marshall Islands, every year counts because of our geographical location and conditions. So we want to make sure that there is one target that we can work for as an organisation; that we can meet and then come together and agree on the intermediary targets to get to zero emissions. We cannot get to zero suddenly!” DM/OBP