Key shipping nations endorse uniform carbon tax

WPB: A coalition of prominent shipping nations has expressed support for implementing a uniform carbon tax on emissions from the maritime industry. Among them are Liberia and Panama, which oversee the largest shipping registries globally. Together with 43 other jurisdictions, they represent 66% of the world’s total shipping tonnage and have collectively approved the proposed levy targeting shipowners. Despite opposition from countries like Brazil, China, and the United States, the broad backing enhances the likelihood of reaching an international consensus.

Shipping accounts for roughly 3% of global carbon emissions, placing it on par with the airline industry. Advocates believe that a fixed tax would incentivize shipowners to transition to low-emission fuels or adopt cleaner alternatives.

As one of the most efficient modes of transportation, shipping underpins the operations of global retailers like Amazon and Ikea, allowing goods to be transported swiftly and at low cost. This industry plays a vital role in sustaining the consumer lifestyle prevalent in the Global North. However, it has faced criticism for decades of minimal regulation. A climate policy specialist highlighted to The New York Times that international trade routes fall outside the authority of any single nation, contributing to this regulatory gap. A global carbon tax could potentially generate approximately $100 billion annually, which could be directed toward aiding developing nations in addressing climate change challenges. Meanwhile, Maersk, a leading container shipping company, expressed optimism that consumers would accept higher costs for eco-friendlier shipping options.

Unresolved tax specifics

Although discussions about the levy have been ongoing for years, the endorsement from Liberia and Panama is seen as a pivotal development, even without the support of key exporters like China. However, disagreements persist over the tax’s specifics, particularly the rate to be imposed. Liberia has proposed a charge of $18.75 per ton of emissions, while the Marshall Islands—ranked third in global shipping registries and highly vulnerable to rising sea levels caused by climate change—advocate for a significantly higher fee of $150 per ton.

Low tax rates have historically attracted companies to register their vessels in countries like Liberia, but a shipping expert emphasized to the press that an effective energy transition would require levies ranging from $100 to $150 per ton. Additionally, incentivizing the use of Net Zero vessels would be critical to achieving substantial progress.

By Bitumenmag

Shipping, Market, Bitumen, Petroleum