In a submission to the International Maritime Organization, the International Chamber of Shipping (ICS) has put forward a comprehensive proposal for a global levy on carbon emissions from ships.
ICS, which represents the world’s national shipowner associations and more than 80% of the merchant fleet, proposes that the levy be based on mandatory contributions by ships over 5,000 grt trading globally for each tonne of CO2 emitted. The money would go into an “IMO Climate Fund.” The ICS announcement does not put a dollar figure on the amount of the levy, but says that “as well as closing the price gap between zero-carbon and conventional fuels,” the funding would be used to deploy the bunkering infrastructure required in ports throughout the world to supply fuels such as hydrogen and ammonia.
Shipping is responsible for approximately 2% of global carbon emissions and the IMO has recognized the need for urgent action to decarbonize. ICS says that 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.
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 minimize any burden on UN member states and ensure the rapid establishment of the carbon levy, says ICS, the framework proposed by industry would utilize the mechanism already proposed by governments for a separate $5 billion R&D fund to accelerate the development of zero-carbon technologies. According to ICS, IMO is scheduled to approve the R&D fund at a November meeting, immediately following the 2021 UN Climate Change Conference (COP 26), being held in Glasgow, Scotland, October 31- November 12.
“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 Guy Platten, secretary general of ICS. “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 decarbonization of shipping.”
ICS believes that a mandatory global levy based MBM (market based measure) is “strongly preferable to any unilateral, regional application of 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% 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.”