Shipping Groups Renew Call for Carbon Tax to Fund Decarbonization R&D

(file photo)

Published Apr 21, 2021 3:23 PM by The Maritime Executive

Ahead of President Biden’s summit on the climate, several of the leading shipping organizations are again highlighting their proposals for a $5 billion R&D fund as part of an IMO led initiative to address decarbonization. Taking advantage of the leadership summit that starts tomorrow, and which they see as a precursor to UN’s COP26 climate conference and the IMO’s Marine Environment Protection Committee meeting, the shipping bodies are calling for an acceleration of the efforts using market-based mechanisms (MBMs) to help decarbonize global shipping.

The shipping associations, including BIMCO, Cruise Lines International Association, the International Chamber of Shipping, and the World Shipping Council which collectively represent all sectors and trades and over 90% of the world merchant fleet, are calling on the governments to bring discussions on carbon pricing forward so that they can be considered in tandem with the proposals for the R&D fund. 

“The decarbonization of international shipping will depend on out-of-sector stakeholders developing market-available zero-carbon technologies and fuels and the maritime sector will need the technologies to use these,” write the organizations in the joint statement. “The urgency of the challenge requires leadership and a properly coordinated approach to catalyze and incentivize the transition to a zero-emissions sector.”

The shipping organizations say that they believe that now is the time for the IMO member states to consider the role of MBMs, so that measures can be developed and implemented to facilitate the adoption of zero-carbon technologies and commercially viable zero-carbon ships. Their plan calls for the MBMs to put a price on CO2 emissions to provide an economic incentive for the sector to reduce its emissions by narrowing the price gap between fossil fuels and zero-carbon fuels. 

“Fair and equitable MBMs are a viable policy option to transition to the new fuels and technologies that will be necessary to phase out GHG emissions in the sector,” the statement asserts. “We’re joining with industry colleagues to urge the UN and national governments to prioritize discussion on MBMs to make sure that shipping remains on course to meet vital decarbonization goals.”

The shipping associations renewed their earlier calls saying that these measures will be critical to incentivizing the transition of the global fleet to new fuels and technologies, which will be more expensive than those in use today.

For a pricing signal to work, the statement says that there must be viable alternatives to fossil fuels. These alternatives do not yet exist for large trans-oceanic ships they said in renewing calls for an IMO coordinated R&D fund – to be financed by the industry - so that ocean-going ships will be able to switch to new fuels. 

The shipping groups are calling for any MBM to be applied fairly and equitably. They repeated concerns that have been raised over unilateral carbon pricing schemes, such as the EU’s proposed expansion of its ETS, which they say some observers see as a market-distorting solution to a global problem.