US Proposes Legislation to Tax Marine Carbon Fuels and Port Emissions

maritime carbon emissions legislation — Two bills were simultaneously introduced targeting carbon emissions from ships sailing to and in U.S. ports

Members of the U.S. Senate and House of Representatives uses the backdrop of World Ocean Day yesterday to propose legislation aimed at cutting emissions from ships sailing to U.S. ports and while in the ports. Following the model established by the European Union with its FuelEU Maritime initiative, the elected U.S. representatives are seeking to tax and limit carbon-based fuels.

Critics of the International Maritime Organization have repeatedly warned that if the IMO did not accelerate its efforts more individual countries would begin to adopt legislation setting their own standards. For the shipping industry, fear is an inconsistent mix of legislation making it increasingly difficult to operate on a global basis.

“We need an all-hands-on-deck approach to prevent the worst effects of climate change, so we’re introducing new legislation to encourage clean shipping, reduce the dirty fossil fuels polluting our oceans, and protect neighbors from the air pollutants plaguing port communities,” said Senator Sheldon Whitehouse of Rhode Island and one of the sponsors of the proposed legislative efforts. “I’m glad to introduce this pair of bills with Senator Alex Padilla to steer the global shipping industry away from emissions-heavy fuels and toward sustainable shipping technologies that are being developed here in America.”

Senator Padilla launched the Clean Shipping Act of 2023 with the support of colleagues including Congressman Robert Garcia of California in the House of Representatives which aims to reduce greenhouse gas emissions from the shipping industry by setting carbon intensity standards for fuel. Concurrently, Senator Whitehouse with the support of his colleagues introduced the International Maritime Pollution Accountability Act, which calls for imposing a pollution fee on large marine vessels offloading cargo at U.S. ports.

The Clean Shipping Act of 2023 would follow the EU’s lead by directing the Environmental Protection Agency (EPA) to set progressively tighter carbon intensity standards for fuels used by ships in order to reduce greenhouse gas emissions by 2040. The bill sets progressively tighter carbon intensity standards for fuels used by ships consistent with a 1.5°C decarbonization pathway set out in the Paris climate agreement.

As written, the bill would require lifecycle carbon dioxide-equivalent reductions of 20 percent from January 1, 2027, 45 percent from January 1, 2030, 80 percent from January 1, 2035, and 100 percent from January 1, 2040. It would also set requirements to eliminate in-port ship emissions by 2030.

“The Clean Shipping Act of 2023 is a strong, necessary step that will make our maritime ports greener and address ongoing challenges contributing to the global climate crisis,” said Congressman Garcia. “Not only does this bill drastically decrease shipping emissions in the United States, but it brings long-awaited justice to our port-adjacent communities that have suffered the consequences of port pollution for far too long.”

The second proposed piece of legislation, the International Maritime Pollution Accountability Act, would levy a pollution fee on large marine vessels, over 10,000 gross tons, offloading cargo at U.S. ports. According to the sponsors, this size threshold would exclude most domestic shipping placing the onus on the international industry. They said the bill would drive industry-wide decarbonization efforts and incentivize the use and development of cleaner maritime fuels.

This proposed legislation calls for imposing a $150 per ton fee on the carbon emissions of the fuel burned on the inbound trip, as well as fees for the nitrogen oxides ($6.30/lb.), sulfur dioxide ($18/lb.), and particle pollution (PM2.5) ($38.90/lb.).

According to the bill’s sponsors, these pollution fees are estimated to raise approximately $250 billion over 10 years, providing critical funding for decarbonization efforts in the maritime economy. The revenues collected from the fees would go toward modernizing the Jones Act fleet with low-carbon vessels, revitalizing and electrifying U.S. shipbuilding, and addressing and reducing pollutants in America’s port communities, along our coasts, and in the oceans.