Taxing shipping emissions is not all plain sailing

Taxing shipping emissions is not all plain sailing

5th November 2012

In 2007, the shipping industry emitted more CO2 than Germany. However, by 2050, the International Maritime Organisation predicts that the 2007 tally of 870 million tonnes of CO2 could be 2-3 times bigger as the industry continues to grow unless action is taken. This figure equates to more than modern day Russia and India combined.

Taxes on international transport are considered by the UN climate change agency a potential source of contributions to its climate finance programme, the Green Climate Fund, which has a target of raising $100 billion annually by 2020.

A charge on shipping emissions is considered as a significant potential contributor with a fair degree of predictability.

The responsibility for figuring out how to work out this fair degree of predictability lies with the International Maritime Organisation, with the hope that any deal will respect the UN climate change agencys guiding principle of Common But Differentiated Responsibility.

Common But Differentiated Responsibility is designed to ensure that those who made the greatest contribution to causing climate change and who are best equipped to respond take on the greatest burden to tackle it. An International Maritime Organisation deal without it would not gain support at the UN climate change agency.

However, this is where the complications begin.

While the UN climate change agencys members discuss regulations for countries, the International Maritime Organisations Parties are regulating ships.

Placing levies only on ships from developed countries, could trigger mass re-registration of ships to sovereign nations where those levies do not apply, a process known as reflagging.

The International Maritime Organisations pursues a no more favourable treatment policy to keep the global shipping fleet under one global set of rules. However, this contrasts with the concept of Common But Differentiated Responsibility.

A flat rate would also mean developing nations would be hit with the same charges as the wealthiest. The poorest nations are not responsible for the mass manufacturing growth or consumption patterns that drive the supply and demand for sea freight.

The most recent meeting of the IMOs Marine Environment Protection Committee in London last month included some of the first hazy outlines of what a resolution to this problem might look like.

Mark Lutes, Policy Coordinator at the WWF Global Climate and Energy Initiative who follows the International Maritime Organisations talks closely.

These conflicts are characterised by strong differences between rich and poor. I think we can recognise and respond to those differences in ways that are compatible with the traditional approach of the IMO based on non-discrimination.

Developing countries have accepted that a system has to be based on non-discrimination. Thats a sign that they are abandoning the problematic position of insisting that any measures had to be voluntary for ships from developing countries and mandatory for ships from developed countries. That represents some flexibility on the part of the developing countries, says Lutes, adding that a proposal by Singapore to encourage nations to consider CBDR could represent the sweetspot of compromise.

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