International shipping recommends tax on CO2 emissions

Global shipping organizations Bimco and ICS urge the IMO to prioritize putting a CO2 tax on the agenda. Danish Shipping, however, makes a decisive objection.

Global maritime organizations Bimco and ICS recommend a tax on CO2 emissions in shipping, urging the IMO to make the topic a priority. 

So far, mainly individual carriers or shipping profiles like Maersk, BW Group and select CEOs have spoken for what in technical terms is dubbed a market-based mechanism, or MBM, which can slow down the emission of greenhouse gases.

Recently, Danish Shipping and the Norwegian Shipowners' Association recommended a CO2 tax be put on the agenda as soon as possible in the intense work that is currently happening in the IMO's marine environment committee, MEPC.

The two heavyweights have criticized the CO2 initiatives the MEPC is currently in the process of finalizing and plan to implement in June this year. Mainly, it is the two indexes EEXI and CII that are supposed to improve efficiency in both the technical aspects and operations, in order for shipping to deliver on its target of improving the overall efficiency by 40 percent in 2030.

According to Bimco, the transition to new fuels is unlikely to happen without a price on CO2.

"One way we can make the current low emission technologies competitive with traditional fuels is through some form of market-based measure. We need a mechanism that equalizes the cost between using low carbon fuels and traditional fossil fuels," says Bimco CEO Sadan Kaptanoglu in the statement.

Danish carriers are satisfied

The organization writes that "as long as the use of traditional fuel is drastically less expensive, it will slow down the use of alternative fuels and give first-movers in the industry a competitive disadvantage."

"Equalizing the cost can also spur on innovation, because the potential market grows, and speed up the installation of the required infrastructure," adds Kaptanoglu.

Today, Lloyd's List writes that the Marshall Islands have submitted a proposal to the IMO for a tax of USD 100 per tonne, which, however, is well below what other industry players have suggested so far.

In an email to ShippingWatch, ICS expresses its support for getting a CO2 tax on the IMO agenda as soon as possible.

Danish Shipping executive Maria Skipper Schween welcomes the announcements.

"We fully agree with Bimco and ICS that we must put 'market-based-measures', the so-called MBMs, on the agenda of the IMO. But rather than jumping to the conclusions, saying that it should be a CO2 tax that should cost this and that, we would rather turn the discussion around and start out by discussing what our overall goals are," she says, and adds:

"It is paramount that a possible future CO2 tax must be agreed upon in such a way that first-movers in the industry are rewarded. It has to make sense to take the lead, as it often requires large and partially uncertain investments in new technolgies. We look forward to discussing this further at the IMO MEPC later this spring."

Vague chance of regional law

It appears to be a unanimous board at Bimco in support of a CO2 tax. When talking to market participants, they note that it has not been made explicit that the IMO should be in charge of the collection of funds nor the distribution, this, according to sources, could have various reasons.

Although Bimco, in line with other major global shipping organizations, opposes regional environmental legislation, often pointing to the EU and, currently, the quotas that will be presented before the summer, the organization will have to face the fact that regional rules are coming, not only in the EU but perhaps also in China.

- SHIPPINGWATCH

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