OECD think tank recommends three-part plan to reduce shipping emissions

In a response to the ITF recommendations, the International Chamber of Shipping said it prefers a fuel levy, rather than an emissions trading scheme, to reduce greenhouse gas emissions from shipping.    The International Transport Forum, a think tank affiliated with the Organization for Economic Co-operation and Development (OECD) is recommending the U.N. Climate Change Conference (COP 21) being held in Paris from Nov. 30 to Dec. 11 take steps to reduce greenhouse gas emissions from shipping.
   The ITF recommended a three-part “package” of actions in a policy brief released Monday:

• An absolute emissions target for shipping, that would limit global warming to 1.5° C or 2° C. “Considering the size of its current and projected emissions, it would be odd if countries are expected to adhere to emission targets but not the shipping sector, especially since it would be impossible to apportion shipping emissions to countries,” said the ITF. “If the shipping sector would apply a 2°C pathway, it would have to cut CO2 emissions from its ships to 0.4 billion tonnes by 2050 and achieve zero carbon emissions by 2080.”
• A mandate for the U.N.’s International Maritime Organization to develop an action plan with concrete measures to reach the emission target. These measures would include lower ship speeds, increased ship utilization, more energy efficient ship designs, and use of alternative fuels such as LNG as opposed to heavy fuel oil.
• A carbon tax for the shipping sector. “This approach has the advantage of administrative simplicity,” said ITF. “It would be easier to implement than any other market-based mechanism. The impact on maritime trade would be marginal if the tax were set at around $25 per ton of CO2. The receipts of such a carbon tax could provide a substantial source of finance for the Green Climate Fund. As such, part of the revenues could be used for compensation of developing nations affected by the carbon tax on shipping.”

   The International Chamber of Shipping (ICS), a trade organization whose membership includes national shipowners’ associations from 37 countries representing more than 80 percent of the world merchant fleet was quick to respond to the recommendations.
   “While shipping may currently have CO2 emissions comparable to a major OECD economy, it is inappropriate for the ITF to propose that the industry should be treated like an OECD economy,” said ICS Secretary General Peter Hinchliffe.
   The chamber said the $25 per ton carbon price “would be almost three times higher than the carbon price paid by shore based industries in developed nations.”
   If the member states of the International Maritime Organization decide to adopt a shipping market based mechanism, “the industry’s clear preference is for a fuel levy, rather than an emissions trading scheme or other complex alternatives that would distort global shipping markets,” said ICS.
   If a levy was developed by IMO, “any money collected should be proportionate to international shipping’s share of the world’s total CO2 emissions (2.2% in 2012 compared to 2.8% in 2007), not the $26 billion a year suggested by the ITF,” it added.
   About 70 percent of the world merchant fleet is registered in United Nations Framework Convention on Climate Change (UNFCCC) ‘non-Annex I’ developing countries, and maritime trade is of vital benefit to rich and emerging economies alike, according to ICS. Many of those ships, however, are controlled by companies in the developed world.
   “Shipping is committed to reducing CO2 and has a responsibility to contribute to the achievement of the United Nations ‘2 degree’ climate change goal. But the UNFCCC recognizes that developed and developing nations should accept differing commitments, and shipping is no different, especially in view of its vital role in the movement of about 90 percent of global trade,” said the chamber.
   China and India, for example, have already made positive CO2 reduction commitments to COP 21, said ICS, but “these will not deliver absolute CO2 reductions for several years.” It added that some richer nations in line with the UNFCCC’s principle of “common but differentiated responsibilities” have made “more ambitious commitments.”
   “Shipping meanwhile has already reduced its total CO2 emissions by more than 10 percent (2007- 2012) and CO2 per tonne-mile by around 20 percent (2005 – 2015). It is therefore on course for carbon neutral growth,” said the chamber.