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RMI, Solomons make a ‘lonely case’ for carbon price on shipping

Pacific island nations made the case for a carbon price to tackle shipping’s climate impact at the UN body responsible for seaborne transport on Wednesday, but found only tepid support.

At a environmental committee meeting of the International Maritime Organization (IMO), the Marshall Islands and Solomon Islands jointly proposed a carbon price of $100 a tonne on bunker fuels.

Major emerging economies mainly opposed the measure and the principle of a carbon tax, while European countries backed carbon pricing in some form but did not endorse the specific proposal. The US was neutral on the topic.

The Marshall Islands ambassador to the IMO Albon Ishoda told Climate Home News: “There is clearly division at IMO as to those who are prepared to proactively move forward and those who prefer to delay at all costs.”

One of the only countries to directly support the proposal was Tonga. Its representative said it was “the only measure so far proposed which can achieve 1.5C alignment and an equitable transition”, referring to the most ambitious global warming limit in the Paris Agreement.

European countries like France, The Netherlands, Italy and Finland said the US$100 levy should be considered by a working group set up by the IMO on medium and long-term measures to reduce emissions.

Climate Home News understands that developed countries regard the price as too high and have concerns about how the funds raised will be spent.

When asked if US$100 was too high, Ishoda told Climate Home News: “The science is clear that US$100/t is the minimal floor, not the ceiling, needed now to send a clear unequivocal signal to market.”

He added: “Obviously it will need to be reviewed and ratcheted up quite quickly to meet the price differential between fossil fuels and alternatives. But the change in price with a US$100 levy is well within the price fluctuations of existing fuels.”

The world’s biggest container shipping company Maersk has called for a US$150 levy on shipping fuel to shift the industry towards green alternatives.

Larger developing countries like China, South Africa, and Saudi Arabia – as well as Russia – said they had concerns about a carbon tax.

The world’s biggest shipping registry, Panama argued a carbon tax could increase transport costs, endanger food security and harm the economy.

The representative of Vanuatu argued that an increase in the cost of fuel and transport would be passed on to consumers. This would have a disproportionate impact on small-island developing states.

Albon Ishoda told Climate Home News: “In the vast majority of cases, the increase in transport goods for most goods and cargo is highly marginal”.

However, he said, “on a narrow range of cases, especially for countries such as mine, there is a risk of disproportionate negative impact and this will need a mechanism to compensate these situations.

“But we need to work these matters out alongside the development of the measure. As we keep saying we are out of time.”

The proposal will be revisited in November. Also kicked to the next meeting was a more modest proposal, supported by the shipping industry’s trade association and several states, for a levy of US$2 a tonne of fuel to fund research and development of clean shipping technology. That translates to a carbon price of US$0.64/t.

Most developing countries opposed it while many European and Pacific countries argued it was a distraction from carbon pricing at a high enough level to encourage adoption of cleaner fuels and technologies.

The IMO did agree a package of short term measures to trim ships’ carbon intensity 2% every year between 2023 and 2026.

That works out at an 11% efficiency improvement between 2019 and 2026. The U.S, UK and most European countries wanted at least a 22% improvement.

Transport and Environment shipping campaigner Faig Abbasov called the IMO’s decision “egregious”, “cosmetic” and “greenwashing”.

According to International Council on Clean Transportation analysis, this trajectory is no better than business as usual. To be compatible with a 1.5C global warming limit, a 6-7% annual reduction in carbon intensity is needed.

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