Pacific and Caribbean states propose groundbreaking global shipping emissions levy
Source: Marianas Variety News & Views
Author: Rnz Pacific
PAGO PAGO (RNZ Pacific/Pacnews) -- Eight Pacific and Caribbean small island developing states are calling for a US$150 levy on each ton of greenhouse gas (GHG) emissions produced by the shipping industry.
The new proposal is an increase from US$100 per ton universal mandatory levy on GHG emissions the group called for in 2019, which they wanted to come into effect in 2025.
The countries are proposing an entry price of $150 per ton/CO2-equivalent, in combination with a Global Fuel Standard.
The original $100 per ton/CO2-equivalent proposal was submitted to the UN's global shipping regulator, International Maritime Organization (IMO), at the Marine Environment Protection Committee (MEPC76), which at the time was labelled as a "landmark proposal".
The group of countries have also set out a common position on revenue disbursement, arguing for most funds to come to the priority needs of climate most vulnerable states.
Last year, the IMO doubled its carbon reducing ambition, agreeing to reach net zero by 2050, with interim checkpoints in 2030 and 2040.
It was largely driven by the 6PAC - a nickname given to six Pacific Island countries in 2015 - that are calling for the shipping industry to align itself with the global 1.5 degrees climate target.
The IMO is now preparing for crucial negotiations scheduled for March 2024, where the focus will be on developing legally binding measures to give the 2023 Strategy real teeth.
Dr Peter Nuttall, who works for a research team on transport decarbonisation out of the Marshall Islands, said the IMO is meeting in March to discuss a price on greenhouse gas emissions which needed to be finalized in 2025.
He said "it's a critical watershed moment" for the IMO international shipping regulator.
Pacific nations are asking for a higher levy to what was proposed in 2019 because of delays in implementation, Dr Nuttall said.
"The IMO has determined that the mid-term measures will not come into effect before 2027 at the earliest and there's a lot of people suggesting maybe not until 2030.
"Every delay increases the price. Therefore, we have to put the price up now."
Pushback
Nuttall said he expects Pacific nations will face push back with their proposal.
"You have highly conservative nations that are incredibly worried about what the costs and impacts of this will be on trade," he said.
"The BRICS (Brazil, Russia, India, China and South Africa), of course, do not want anything like this level of ambition. The US has already publicly stated it is not happy with the idea of an international levy either.
"There is certainly strong opposition but regardless of that the economic rationale makes sense. You can't argue with the fact that this is the most logical, most rational pathway forward if we are really to tackle this problem."
Dr Nuttall said the levy is the "biggest investment opportunity for shipping in its history".
"We're talking trillions of dollars that will be ploughed into the shipping industry over the next 20 years to reach these targets."
He said the levy that is being called for will increase the shipping bunker (fuel) price by about US$500 per ton.
"People are going, 'oh, that's an enormously large figure and that's going to increase our costs of importing goods'.
"[But] the analysis that has been done by world experts is it is going to only have a marginal impact on trade costs, and you have to recognize the volatility that already exists."
Dr Nuttall said price volatility for bunker prices over the last three had already fluctuated between US$400 and US$1150 per ton.
"We already see huge levels of volatility in the amount of money that we pay for global shipping anyway. The text that we are proposing would be within the range of just volatility."
Outlining policy details
Marshall Islands Special Envoy on Maritime Decarbonization, Albon Ishoda, said last week that a decarbonization path was agreed to last year and the challenge is now outlining the economic policy details.
"In the face of pressing urgency to curb major emitting sectors, the IMO grapples with finalising the carbon price and establishing collection and disbursement mechanisms by 2027", Ishoda said in a statement.
"Delaying these decisions escalates overall costs and jeopardises trillions of dollars in economic opportunities for the industry."
Solomon Islands delegation head at the IMO, Alan Lillia, said they are "disappointed with the elapsed time since our original submission at MEPC76."
"Originally proposing a $100/ton entry price for operationalization by 2025, we now need to adjust upwards to $150/ton with the starting time pushed to 2027," Lillia said.