Global Debate Intensifies as IMO Prepares to Decide on Carbon Tax for Shipping

The International Maritime Organization will begin this Monday pivotal talks that will make or break future emission regulation of the world's shipping industry. Most in contention at the center of debate is the newly proposed carbon tax that will cut greenhouse emissions from global marine trade. The move has generated unease among member states, generating robust support in small island countries and opposition in nations such as China and Brazil. The final decision of the talks, by Friday, can influence how the sector gets behind the world goal of carbon neutrality by 2050.

Presently, shipping accounts for just under 3% of international greenhouse gas emissions. Even with domestic efforts and technological innovation to reduce emissions, international action under an international regulatory regime has been sluggish. The carbon charge proposed is, for others, a straightforward and effective way of deterring emissions by making them expensive economically. Its proponents are convinced that such a tax would induce investment in cleaner technology, alternative fuels, and cleaner practices in shipping. In addition, they propose that the revenues realized under this tax be utilized in supporting climate adaptation and mitigation efforts in vulnerable countries.

Pacific, Caribbean nations, and the United Kingdom are fronting the initiative for a world tax. They are doing this in recognition of the disproportionate effects of climate change on economically and low-lying nations. But opposition to the levy has come from a group of some 15 nations, including leading farm-exporting countries. They claim that the tax would increase the price of exported goods like palm oil, corn, and grains. They also fear that it would increase global imbalances by unfairly hurting developing economies and exacerbating food shortages.

Other proposals have been floated by some nations, which prefer tools considered cheaper. Of these, the carbon credit programs are most famously known in which states and corporations purchase and sell permits for the emission of carbon dioxide. While as valuable as this mechanism would be to open up some wiggle room and spur innovation, most view this process as not sufficiently pressured or instant effect to spur meaningful change in the not so distant near term. There are also worries that a system based on credit might be used by richer nations or multinationals to have their current rates of emissions essentially locked in through the pretext of compliance.

University College London research suggests that postponement or rejection of a carbon charge could throw global efforts to decarbonize shipping off track. Analysts say that without a clear policy, the industry could face skewed fuel markets and an unlevel playing field. Ambitious industrial nations with strong manufacturing backlogs may be the winners, but others cannot compete. This imbalance can derail global trade and climate goals both.

A solution suggested for augmenting or replacing the carbon tax is charging international fuel standards. The standards would try to constrain the carbon within the fuel used by the vessels, thus prompting the usage of cleaner sources. Some biofuels, however, have challenged their unexpected outcomes on nature. Palm oil and soybean oil-derived fuels have come under attack for their association with deforestation and land-use change, which can negate any carbon benefit of their use. While there are a few nations, such as Brazil, which promote the utilization of these biofuels as part of a transition to a lower-carbon future, over 60 environmental non-governmental organizations have marched against their widespread deployment in shipping fuel blends.

Some of the other breakthrough technologies, such as synthetic fuels made from hydrogen, are in consideration. The fuels are low-carbon but still very expensive to make and require huge infrastructural investment. Propulsion based on wind energy has also been under consideration with some of the ships being retrofitted so that they may use sails or rotors for purposes of reducing fuel usage. The alternatives, although promising, are not at the moment universally scalable or achievable for full-scale global shipping.

The result of the IMO negotiations may also serve as a model for future international climate negotiations. If a carbon tax is agreed to, it would be a model for other sectors that are firmly wedded to decarbonization. But if negotiations break down without agreement or result in a watered-down compromise, it might signal the difficulty of making multilateral deals in a polarized world.

The European Union, a vocal long-time supporter of an international carbon tax, is closely observed now as it takes its next move. It has been said that the EU would move towards a carbon credits system to suit domestic political imperatives and trade with the world. This action could have implications for the stance taken by other big economies and render any agreement made ineffective at last.

A week at most to give a verdict, the IMO needs to balance conflicting interests and prioritize its policy on the greater good of emissions reduction under the Paris Agreement. Negotiations are occurring at a bad time as accelerating sea levels and extreme weather cycles continue to alert us to the need for immediate, collective action.

Whatever the way the outcome goes, the negotiations will determine the regulatory direction of the shipping industry for generations to come. Governments, industry, and civil society stakeholders will all be waiting with bated breath, knowing that the stakes go far beyond the horizon. A strong, unified push could put the sector on a path to sustainability. A fragmented or delayed approach, on the other hand, could undermine global climate goals and leave the world’s oceans bearing the brunt of inaction.

Source: Phys.org via AFP