Page 42 - IB August 2024

Shipping and Ports

Continued from page 40 poorest and most vulnerable nations. Revenues from shipping
GHG levies must be directed to support these countries in
Fuel Standard would be no more expensive than the other their maritime transition and broader climate response. This
options on the table, and would be the only way of delivering is not just about reducing emissions but ensuring that no
the efficiencies and equity needed to transition away from country is left behind.”
GHG-emitting fuels. The Pacific states have sought to strengthen their position
UNCTAD estimates a US$150-300/ton price on shipping’s by commissioning research by University College London
carbon would raise up to US$127 billion p.a. between 2027- and the Micronesian Center for Sustainable Transport to
2030. investigate how taking climate action would affect their
countries’ imports/exports and the vessel fleets used to
Pacific diplomacy facilitate them. They say this is necessary because Pacific
International shipping accounts for 3% of global GHG, a nations are underrepresented in trade and shipping data.
figure that is anticipated to rise. If the industry was a country, The research—which looked at the situation in Kiribati,
it would be in the top ten of the world’s emitters. Marshall Islands, Nauru, Solomon Islands, Tuvalu and Vanuatu—
Transitioning to non-GHG emitting technologies and fuels concluded that the projected increase in costs per 20-foot
will be a trillion dollar plus investment, according to the container would be between 0.1%-36.9%. Per tonne of bulk,
World Bank, Global Maritime Forum and World Economic the increase would be between 1.2%-6.8%.
Forum. The data indicated that the impact on lower valued
The decision on shipping emissions pricing “was effectively commodities, including food and disaster-related
kicked down the road for more than a decade,” say the goods, would be higher than the impact on higher value
writers of the MCST working paper. commodities.
But they also note that the negotiating landscape has And it found that the increased voyage distances in the
changed dramatically in the intervening years, with the most Pacific, end-of-line effects, trade imbalances, small market
climate vulnerable states driving much of that change, and size and the small number of shipping service providers meant
becoming more vocal at the IMO and other negotiating tables. “any increase in final price paid for maritime transport by
“This change in representation dynamic has far reaching consumers tends to exceed the basic marginal cost increase.”
consequences, with a shift from what was essentially a The report also noted statements from shipping companies
developed/developing world bi-polar negotiating landscape – that these costs would be almost all passed-on directly to
large western and Asian shipping and trading countries on one customers.
side and the large emerging economies from the BRICS and These challenges are compounded by the current economic
petro-states on the other. It is potentially strong enough to status of many Pacific nations.
fully turn the dial at IMO and ensure option 1 [the universal Marshall Islands Special Envoy for Maritime
levy and GFS] prevails.” Decarbonisation, Albon Ishoda, has been one the region’s most
The MCST paper notes that this work is complementary to diligent and consistent government negotiator on climate
the efforts of Pacific Island students and their allies at the change responses at the IMO and other fora. Supporting the
International Court of Justice, Pacific negotiators’ prominence 6PAC+ position, he says: “SIDS face higher levels of debt
at the United Nations General Assembly and global climate distress than other developing countries, with over 40%
negotiations, and a recent International Treaty on the Law grappling with unsustainable debt levels. Between 2016 and
of the Sea (ITLOS) advisory opinion that GHGs are pollutants, 2020, SIDS paid 18 times more in debt service than they
and that the law of the sea requires specific legal obligations received in climate finance.”
on States, with penalties if they do not comply. Ishoda says he expects countries to coalesce around 6PAC+’s
Back at the IMO, Solomon Islands Permanent Secretary for position following the UNCTAD report.
Infrastructure, Allan Lillia, says the UNCTAD findings vindicate However, UNCTAD’s report has been challenged by other
the Pacific Islands’ firmly held position. IMO members, including Brazil, which called the findings
“When we first called for a levy in 2020, everyone said it “nonsensical”.
was too hard to do. When proposed an entry price of $100/ At the IMO, the question of how much revenue would be
ton they said it was far too high. When they delayed and we generated by any emissions reduction measure, how it will be
revised the figures and raised the price to $150/ton last year disbursed and who will manage the transactions are yet to be
they all raised their eyebrows. But, as it turns out, we are determined.
fully aligned with the science.” But the Pacific has laid down the challenge. In another
Vanuatu’s Minister for Climate Change, Adaptation, working paper supporting 6PAC+’s position at the IMO, authors
Meteorology and Geo-hazards, Energy, Environment and led by MCST’s Peter Nuttall write:
Disaster Risk-Management, Ralph Regenvanu, says that the “The IMO has one narrow window in which to achieve
revenue raised through any levy must be fairly shared with a global consensus on delivering the most ambitious and
the countries most vulnerable to climate change. equitable transition pathway for any sector. Time is short and
“The costs of climate change disproportionately burden the the jury is still out.”

42 Islands Business, August 2024