Macron’s shipping carbon levy plans kept alive by new EU proposal

Macron’s shipping carbon levy plans kept alive by new EU proposal — 2023-06-26

Maritime and Ports

Even though efforts by French President Emmanuel Macron to find support for a global carbon tax on the shipping industry failed last week, the measure is still on the table as the European Union has proposed new measures ahead of the International Maritime Organization’s (IMO) Marine Environment Protection Committee (MEPC) meeting in July 2023.

Macron has been a proponent of a global carbon tax on the shipping industry for years and pushed for it most recently during a two-day event on climate finance and global financial reforms co-hosted by the French president with the leader of Barbados last week.

A consortium of Pacific nations led by the Marshall Islands proposed a charge that begins at $100 per tonne and gradually increases to make dirty fuels roughly as expensive as cleaner ones. In the medium run, such a tax could raise up to $100bn per year, albeit the amount would gradually reduce if the levy was successful in convincing shippers to transition away from fossil fuels.

Unfortunately for Macron, only 18 countries currently favour the idea, according to a French diplomatic source cited by several of the country’s media outlets.

Macron admitted that without backing from China, the US, and other European nations – which host major shipping companies – it was impossible to make the idea a reality.

French media also quoted US Treasury secretary Janet Yellen as saying that the proposal by Macron was “something that the US will look at” and German Chancellor Olaf Scholz who stated that it was “an interesting proposal” but that it needed more work.

In parallel with Macron’s attempts, the EU Delegation to the UN, together with Denmark, Palau, and Samoa hosted a meeting in New York on climate and shipping, outlining the EU’s proposals for new climate targets for the shipping sector to be discussed at IMO’s MEPC 80 from July 3-7, 2023.

The EU said in a statement following the meeting that the main target is a net-zero world in 2050 and that the current IMO target of 50% GHG reduction until 2050 was “clearly insufficient.

According to the bloc, international shipping needs to peak its emissions as soon as possible and that good interim targets would be a decrease by 29% until 2030, and by 83% until 2040.

As an economic measure, the EU will propose a levy on the shipping sector’s greenhouse gas (GHG) emissions. The amount of the levy would be proportionate to the amount of GHG emitted by the ship concerned. The EU is open to discussing the use of the revenues from the levy, including for countries vulnerable to climate change.

Another proposal is a technical measure of a greenhouse gas fuel standard. This would mandate a gradual reduction in the GHG intensity of marine fuels used on ships.

The EU believes that the one decisive step for the July IMO meeting is to achieve an agreement on a net zero target for shipping for 2050.

The bloc believes that, if that does not happen, the shipping industry will not have enough incentives to provide alternative shipping fuels such as ammonia, methanol, or green hydrogen, and to invest in ships which can use them.