Why would a group of Shipowners propose at the Durban Conference that they should be subject to a carbon tax? And, when they make such a proposal, why would the Durban Conference not act or at least acknowledge their initiative?
The International Chamber of Shipping (ICS) is the principal international trade association for shipowners, representing all sectors and trades and over 80% of the world’s merchant tonnage. Its membership comprises national shipowners’ associations from 36 countries.
With the support of Oxfam and the WWF, the ICS told the Durban Conference that international shipping should pay a carbon tax of $25 per ton on fuel used in transport. Given current level of consumption of fuel, the tax would raise approximately $25 billion. Although this figure seems large, it represents only a .2 percent increase in shipping costs.
The ICS recommended that the funds generated by this tax, less the costs of administration, be transferred to the Green Climate Fund. So far this is the only funding from the private sector committed to this Fund. The ICS has suggested that the collection of these funds be administered by the International Maritime Organization, a UN mandated body that oversees many international treaties applicable to shipping, and has adopted regulations for energy efficiency of ships.
Developing countries had reservations as even a slight increase in shipping costs would have an impact upon the large food imports that are carried by sea. To lessen this objection the proposal recognizes that the Climate Fund could make payments to developing nations that could compensate for the increased costs of food.
This bold proposal has two advantages: first, shipowners will not be subject to an GHG emissions trading scheme; secondly, shipowners are in a position to transfer the burden of payment to the owners of the cargo transported by ship. The international shipping industry has many decades of experience with “bunker surcharges” that reimburse shipowners from sudden, unexpected increases in the price of bunker fuel. A carbon tax levy would be a relatively simple matter for shipowners to administer.
European nations, including the United Kingdom, gave the proposal political support. Yet the ICS proposal was not even mentioned in connection with the official commentary on the Green Climate Fund, not recognized in any other concluding statements. The behind-the-scenes censor was the US, supported by China, India, Australia, Brazil and South Korea, which spoke generally about various issues in connection with the Climate Fund.
There was one positive development: the issue of a carbon tax on international shipping has been referred to the IMO, inviting that organization to present a more developed proposal to be discussed at Qatar when the Climate Conference resumes.
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