Pressure grows on shipping industry to accept carbon levy

Pressure grows on shipping industry to accept carbon levy

The Guardian — 2023-03-22

Maritime and Ports

Pressure is growing on the international shipping industry to accept a carbon levy on ships that would fund climate action in the developing world, with the World Bank among those pushing for the measure at a crucial international meeting this week, the Guardian has learned.

A levy on the greenhouse gas emissions produced from shipping would encourage companies to upgrade their fleets, run them more efficiently and seek cleaner fuels and technologies.

Shipping accounts for more than 3% of global carbon emissions, but is regarded as one of the hardest sectors to decarbonise, as ships run on heavy, dirty, high-carbon fuel oil.

The International Maritime Organisation (IMO), made up of 175 governments, is hosting meetings in London this week at which the contribution of shipping to the climate crisis will be a key focus. Many nations are concerned that the sector has done too little to address its impact on the climate.

A proposal from the World Bank, seen by the Guardian, would require shipping companies to pay into a fund based on the amount of carbon their fleets emit. Those funds could be spent on reducing emissions from shipping, but the World Bank is pushing to see them directed instead towards projects that could help reduce emissions in poor countries.

At previous IMO meetings, some countries wanted any revenues from a carbon levy to be recycled for spending only within the maritime transport sector. But the World Bank’s research has found that would be unfair, as many developing countries that are landlocked or have small fleets would not benefit. Using a share of a shipping levy “to finance broader climate aims in these countries could thus help to support a more equitable transition”, according to the bank.

The IMO will come under fierce pressure at its meetings this week, which run until 2023 March 24, to show greater urgency in decarbonising shipping.

Emissions from shipping, along with those from aviation, have long been omitted from international climate agreements, such as the Paris agreement, because the transnational nature of transport makes it hard to allot their emissions to a particular country. That has allowed the sector to escape scrutiny, in the eyes of campaigners.

Tristan Smith, reader in energy and shipping at UCL, said discussions at the IMO last year had shown that many countries accepted the need to regulate carbon from shipping, but the outcome of this week’s meeting was still uncertain.

I think the chances are high that we will have a carbon price and that there will be a fund and revenue disbursement. The exact quantums are uncertain, as are the specifics of use. But there was consensus in the debates last year that we will have an ‘economic’ element or measure – some sort of pricing mechanism – and that this will need to help ensure a just and equitable transition,” he said.

A key difficulty would be designing a levy and fund that works for enough of the IMO member states, which all have different priorities for how they would like the fund to be disbursed, he said.

John Maggs, shipping policy director of the Seas at Risk campaigning group, praised the World Bank for its proposals. “It’s really important that they are engaging so thoughtfully. At the last shipping climate negotiating round the World Bank called for a 40% cut in ship emissions by 2030. Only the environment groups were calling for more, and not much more,” he said. “It’s pretty much what the science says is needed but many in the shipping space are in denial about that, thinking they can [carry on] business as usual to 2030 and then phase in new fuels. The numbers simply don’t add up for that kind of approach, and World Bank recognition of that is important.

The World Bank has come under fire in recent months, as many governments have called for reform of its practices, because of a perceived lack of action on the climate crisis. David Malpass, who was appointed by Donald Trump, resigned after months of controversy, and is to be replaced by the former head of Mastercard Ajay Banga.

Maggs said the new proposals should reassure vulnerable countries: “The negotiations at IMO are not being helped by the sense in the developing world, especially small island developing states and the least developed countries, that they are going to suffer economically as a result of any new shipping measure, so anything that points the way towards a just financial settlement is very important.

A spokesperson for the World Bank told the Guardian: “By conducting and sharing analytics related to reducing emissions from international shipping in an effective and equitable manner, the World Bank seeks to support its twin goals: eradicating extreme poverty, and boosting shared prosperity in a sustainable manner, in general; and to inform, facilitate, and accelerate evidence-based climate policymaking in line with the Paris agreement temperature goals at the IMO.