Adding a $25 tax to each tonne of shipping fuel is the simplest way to cut emissions in the sector and help developing countries finance programmes combating climate change, green groups will say today.
A report to be published by WWF and Oxfam said that imposing the levy would tackle the 3.3 per cent of global emissions generated by shipping, emissions which are predicted to rise by between 150 and 250 per cent by 2050.
The industry has already agreed technical efficiency standards during International Maritime Organisation (IMO) talks in July designed to lower emissions by between 25 and 30 per cent by 2030. But scant progress has been made towards agreeing an international carbon pricing regime to help drive down emissions further.
As a result green groups have consistently called on the sector to back more ambitious emission reduction policies, with WWF and Oxfam today arguing that a basic levy represents the most effective means of cutting emissions.
The NGOs will also claim that the proposed levy could generate $25bn a year in receipts by the end of the decade, more than $10bn of which could be funnelled into the $100bn annual Green Climate Fund (GCF) agreed at last year’s Cancun summit.
Negotiators have yet to decide how to finance the GCF and analysts have said a greater proportion of the cash will need to come from private sources, such as taxes on shipping and aviation, rather than cash-strapped governments.
Jason Anderson, head of climate and energy policy at WWF’s European policy office, called for the plan to be rubber stamped at the Durban climate talks in November.
“The climate conference in Durban this year provides the ideal opportunity for a global agreement on shipping,” he said in a statement. “A mechanism to address shipping emissions and at the same time provide financing for developing countries should be one of the pillars of a strong package of outcomes in Durban that can put the world on a path to avoiding disruptive climate change.”
However, David Balston, director of safety and environment at industry body the UK Chamber of Shipping, told BusinessGreen that the potential inclusion of shipping in the EU’s emissions trading scheme (EU ETS) from 2013 created the possibility that the industry would end up being over taxed.
“We believe shipping should pay in accordance with its level of carbon emissions [and] 3.3 per cent of £100bn is £3.3bn, not $10bn, so that level seems disproportionate,” he said. “And if one bears in mind the potential inclusion in the EU ETS and other market-based measures [under the IMO] it looks dangerously like a triple tax.”
Keith Allott, head of climate change at WWF-UK, countered that a global tax would remove the need for regional measures such as the EU’s proposals.
He also pointed out that the paper says the $25 tax would add just 0.2 per cent to the cost of global trade, and contains proposals to ensure that developing countries are not penalised, defusing another common criticism of a straight emissions levy.
For example, South Africa, whose import costs are projected to increase by 0.14 per cent as a result of the proposal, would receive compensation of approximately $200m per year, while Bangladesh would get $40m per year, in addition to any revenues received from the GCF, to cover a 0.19 per cent increase in costs.
Allott said that a carbon tax could also be applicable to aviation, another industry struggling to agree on a global solution for cutting emissions.
Airlines are set to join the EU ETS from January next year, a policy that has sparked lawsuits from US carriers, threats of trade wars, and strong criticism from Chinese and European trade bodies.
“In principle [a levy] could apply to aviation … although there is more awareness of the potential for this to be win-win in the IMO talks than the aviation sector,” he told BusinessGreen. “It’s just as relevant as for shipping, and in some ways the distribution effects are less as it tends to be the wealthy or middle classes that fly.”
