Advocacy at IMO: Follow Europe’s carbon tax model to reduce emissions

Strict global regulations are needed to reduce the carbon footprint of shipping.

The International Maritime Organization’s discussions on introducing a global carbon tax for shipping are taking place this week at the meeting of its Marine Environment Protection Committee.

A carbon tax is certainly what shipping needs. If structured carefully, it can push industry to emit less by encouraging initiatives to improve efficiency and the implementation of carbon-free technologies and fuels.

While most of the industry strongly supports a global carbon tax, there are widespread concerns about the process and its likely outcome.

Mandatory carbon intensity measurement, which will come into force in 2023, will put the IMO on a dangerous path.

It is based on the Carbon Intensity Indicator (CII) measurements, which rely on a grossly imperfect measurement based on a ship’s theoretical cargo take, disregarding the transport work performed.

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These measures ignore operational and commercial efficiency and introduce the wrong incentives.

Recent proposals on global carbon taxes – one tabled by China and supported by Brazil, Argentina, South Africa and the United Arab Emirates; and one of the two proposals put forward by Japan — are of particular concern.

Both proposals want to levy a carbon tax on ships based on their CII scores. If the carbon tax proposals drafted by China and Japan are implemented, the regulations will further penalize ships and operations with the lowest emissions per ton of cargo carried – ultimately favoring empty ships.

“Foolish” approach

This approach, however well intentioned, is foolish. It’s as if the International Air Transport Association were to introduce measures that reward airlines for flying half-empty jumbo jets. It is wasteful, it is wrong and it is misguided. The devil is in the detail.

Operational and commercial efficiency is paramount to reducing emissions before zero-emission fuels and technology are widely available for all transportation segments.

Efficiency will also remain a critical factor in the future when the industry switches to zero-emission fuels, as these will be two to three times more expensive than fossil fuels.

To put it bluntly, adopting a poorly developed regulatory framework that fails to take into account the importance of operational and business efficiency will hinder the industry’s transition to large-scale use of sustainable zero fuels. emission.

We call on the governments of the European Union, the United Kingdom and Norway to ensure that maritime regulations are practical and sensible. As leading maritime nations, they have a strong voice and a great responsibility.

We must work to avoid senseless and unconstructive compromises.

How can we come to a more constructive diet? Rather than creating more perverse incentives for industry, the IMO should follow the EU’s lead.

In 2023, the EU is set to include shipping in its Emissions Trading Scheme (ETS), a tax based on the actual carbon emissions of ships themselves. These regulations provide an appropriate mechanism to reduce emissions.

They also demonstrate the practicality of having both a pure carbon tax and a cap-and-trade system like the EU’s ETS tied to actual ship emissions.

An approach like this would drive industry to collaborate, improving efficiency in every part of the marine supply chain. It would also stimulate investment in the zero-emission fuels of tomorrow.

In a sector responsible for about 3% of greenhouse gas emissions, carefully designed regulations and incentives are essential. Ill-conceived compromises, blocking positive change, are not.

If the IMO rules are implemented as proposed by China and Japan, we risk ending up with yet another flawed and counterproductive regulation.

Engelbret Dahm is managing director of Klaveness Combination Carriers

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