Shipping industry U-turn on carbon pricing long overdue
Posted on 27 April 2021
The shipping industry's leading lobby group ends years-long opposition to carbon pricing.
(27 April 2021) - The shipping industry’s leading global lobby group the International Chamber of Shipping (ICS) last week ended its years-long opposition to carbon pricing.
It is imperative now that ICS and other sponsors should withdraw their IMRB proposal to allow time for discussion on carbon pricing, and support the far more serious and ambitious proposal for a $100/mt carbon price already on the table. As advocates of climate and public health action, we note this U-turn as long overdue on the road to decarbonizing the shipping industry - which at 1 billion tonnes of carbon dioxide (CO2) emissions a year and rising, is one of the world’s top ten largest polluters of the earth’s climate. ICS Secretary-General Guy Platten, is reported as saying that a “realization that everything has to be done in parallel”, from producing sustainable fuels and building bunker infrastructure to new engine technology, is behind the shift in ICS’s position. Many of our organizations have been explaining patiently over the last decade or so that all of these changes across the industry have to happen in parallel. So we welcome this realization, even if it’s taken much longer than the science of planetary warming needed. After its U-turn, ICS is now “calling on world leaders” to urgently examine the role of carbon pricing for the global shipping industry, and prioritize discussion of this topic. We share this sentiment, but must point out the main obstacle to world leaders (or indeed any countries) discussing this topic is ICS’s own proposal for a meagre $2/mt levy on bunker fuel. Instead of discussing carbon pricing, ICS has, since 2019, been pushing for this minimal $2/mt levy on bunker fuel sold (equivalent to $0.67/tonne CO2), in order to fund an International Maritime Research Board (IMRB) to be housed at the United Nations shipping body, the International Maritime Organization (IMO). The IMRB proposal would take up most available bandwidth for discussion at IMO over the next few years - when, as ICS now agrees, we should urgently be designing and implementing a carbon pricing system, as well as developing new measures to urgently cut shipping’s climate impact in the short-term. To show their seriousness of intent about prioritizing carbon pricing discussions, ICS and other sponsors should officially withdraw their IMRB proposal to free up space in the IMO’s calendar. Failing that, they should acknowledge the far more serious and ambitious proposal for a $100/mt carbon levy, submitted by the Marshall Islands and Solomon Islands, and merge their IMRB ideas into that. Indeed, there is no need to “bring forward” the discussions - this concrete proposal is on the table and will be discussed in the IMO’s June meeting. We look forward to hearing industry support for it. This press release is issued by: Environmental Defense Fund: Aoife O’Leary - firstname.lastname@example.org Transport & Environment: Faig Abbasov - email@example.com Pacific Environment: Madeline Rose - firstname.lastname@example.org Carbon Market Watch: Sam Van den plas - email@example.com WWF International: Mark William Lutes - firstname.lastname@example.org NOTES TO EDITORS Background: Carbon pricing has been at the centre of economic thinking about how to reduce emissions in the most cost-effective manner for many years. China this February launched the world’s largest carbon market, for its power sector. The EU’s Emissions Trading Scheme was the first major carbon market, and has successfully helped reduce power sector and industrial emissions. California, the world’s fifth-largest economy, established its emissions trading program in 2013, and current U.S. Treasury Secretary Janet Yellen has spoken in support of a carbon price for the USA starting at $40/tonne and rising over time. Many other countries have implemented carbon pricing to control emissions, including Canada which has mandated a carbon price which will reach $170 per tonne by 2030. What happens next? Governments will meet virtually at the 76th Marine Environment Protection Committee (“MEPC76”) this June 10-17. The key choice for governments is whether to take forward in some form the Marshall Islands and Solomon Islands’ serious and ambitious proposal for a $100/mt carbon levy, or instead to prioritize discussion of ICS’ (and other industry groups) IMRB proposal for a $0.67 per tonne of CO2 equivalent levy ($2/mt per tonne of bunker fuel) - over 100 times less ambitious. As well as starting discussions of Mid-Term Measures such as carbon pricing at the June meeting,governments are expected to approve an extremely weak package of Short-Term Measures (the result of three years of negotiation since the Initial Strategy), that have the following flaws:
No carbon intensity target, and a weakened Energy Efficiency of Existing Ships Index (EEXI): The proposal still contains no carbon intensity target compatible with 1.5ºC trajectory, and reduces the stringency of the required EEXI for many ship types.
Loopholes: non-compliant ships will be able to continue underperforming for three consecutive years before they even have to file a plan to make improvements, and can easily dodge the rules and continue underperforming indefinitely by ensuring one compliant year every three years.
No actual enforcement: All clauses that would create consequences for non-compliance - such as increased EEXI stringency, or ultimately revoking a ship’s statement of compliance - have been removed. CSC and Pacific Environment’s moderate enforcement proposal (of limiting time at sea in the following year, in proportion to non-compliance) - has been excluded.
These purposefully designed weaknesses means the package will, at best, now curb only 0.65% to 1.3% of GHG emissions from a business-as-usual growth pathway by 2030, according to ICCT, where the business as usual pathway is +15% above the industry’s 2008 baseline. This leaves shipping sector emissions around 14% higher in 10 years time than today’s already high level of 1 billion tonnes a year of CO2..
The shipping industry's largest lobby group makes an u-turn on carbon pricing.