One of the world’s largest shippers has warned shipping it ought to prepare for a carbon levy.
Mining giant BHP is preparing for greater shipping environmental clampdowns once the global sulphur cap is out the way next year.
In a recent interview with The Australian newspaper, BHP’s maritime vice president Rashpal Bhatti said, “There may well be a carbon levy associated with bunkers from the IMO. If that is the case it will be a significant driver to bring down emissions from any fuel that’s used. And our competitors will obviously have to think about that too.”
BHP made headlines this July when issuing a landmark tender calling for LNG-fuelled newbuilds to transport approximately 10% of its Australian iron ore exports from 2021. The company is studying 17 of the bids it received with an announcement due soon on the winning parties.
Carbon levies have been discussed within shipping circles for many years. Dr Martin Stopford, the famous British economist and the non-executive president of Clarkson Research Services, has called for a huge bunker levy, effectively more than doubling the price of heavy fuel oil as a way to meet greenhouse gas emission cut targets.
In a working paper issued by the International Maritime Fund (IMF) in September last year, the organisation also came out in favour of a bunker levy.
The report stated that a carbon tax deserves serious scrutiny as a key element of mitigation strategy as it can cost effectively exploit the full range of behavioral responses to reduce emissions within shipping given available technologies as well as raising revenues and being “straightforward” to implement from a technical perspective through the establishment of an International Maritime Organization-supervised fund.
The main issue of the proposed carbon tax on bunker fuel is that it will not necessarily reduce total pollution and externalities.
It will mainly displace them from sea to land.
Which is something akin to hiding the dust under the carpet.
With the added malus (Latin, the opposite of bonus) that to pollute on land is worse then polluting at sea.
Why?
Because polluting on land means polluting close to where the population lives, therefore increasing mortality and morbidity, while polluting on sea means polluting far from population, hence less mortality and morbidity, while environmental damage can be considered about similar.
Moreover carbon is not the only pollutant.
So they best way forward is no to levy a carbon tax, but to implement controls / limits on total life cycle externalities, regardless whether generated on land or at sea.