Decarbonisation levy on bunker fuel under discussion at IMO

Decarbonisation levy on bunker fuel under discussion at IMO

Five shipping associations are pitching a carbon levy of sorts this week in London as International Maritime Organization (IMO) member states meet to discuss short term measures to cut greenhouse gas emissions from shipping.

The shipping organisations, which include Bimco and the International Chamber of Shipping (ICS), are pushing for a bunker fuel levy to go to a decarbonisation research and development fund.

“We have been working on this for quite some time with the aim of developing some really innovative ideas in cooperation with fellow industry associations,” ICS chairman Esben Poulsson told Splash today, stressing that the concept was still a work in progress.

Carbon levies have been back in shipping headlines in recent months.

Speaking at the Global Maritime Forum’s annual summit in Singapore last month, Andreas Sohmen-Pao, chairman of BW Group, said: “To meet international shipping’s decarbonisation challenge, the maritime industry needs a carbon levy, it is coming, and we should shape it.”

The BW boss continued: “We have an opportunity to shape a new maritime future, create a new business opportunity and drive innovation. A maritime green fund could accelerate decarbonisation in shipping, support scaling and infrastructure to deliver new fuels, while taking into consideration the impact on trade and developing states.”

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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6 Comments

  1. Avatar
    Peter Nuttall
    November 13, 2019 at 5:27 pm

    Interesting to see this come out now and hot on the heels of a range of major industry announcements of their commitment to now decarbonise at the scale of large ships and economies . Real progress toward the IMO targets requires use of MBMs and several Pacific States have submitted to past meetings on the need to progress the development of MBMs as a priority for this reason.

    That MBM’s were essential to the overall basket of measures needed was agreed by the IMO in 2006 and reported to UNFCCC in 2009. What was also agreed at MEPC 59 by the greater majority of members represented by over 900 collective delegates was that the greater part of any funds generated by MBMs under IMO should be used for assisting mitigation and adaptation for climate change purposes in developing countries, especially SIDS and LDCs. A smaller portion was to be allocated to R&D and market incentives within the industry. I can only assume that in resuming negotiations on this point, the members of the responsible UN agency will start from this position and not now try and walk back the position they reported to UNFCC then.

    Of course, this means the elephant in the room – the balancing act the IMO has committed to performing between the convention of No More Favourable Treatment (NMFT) and Common but Differentiated Responsibilities and Respective Capabilities (CBDR-RC) – must now be addressed. Between 2010 and 2013 wrestling wiht this beast in the context of MBMs was the subject of protracted and often acrimonious debate. But then, this elephant has been in the room all along, its not going away, it requires considered mature discussion and we can only assume the IMO has gained that maturity since it agreed to disagree on this matter in 2013. As our children keep explaining, we are now out of time so we might as well face that reality and begin the conversation.

    Its still #1.5tostayalive

  2. Avatar
    ANNA ZIOU
    November 13, 2019 at 5:40 pm

    Hi Sam,
    No MBM discussions are talking place this week at the IMO and no submission from the above organisations on a fuel levy has been made. You might want to fact check your article with the ICS.

    1. Avatar
      Peter Nuttall
      November 13, 2019 at 7:55 pm

      I am entirely certain that MBMs are being intensely discussed at IWSG-6, although it would have been preferable if it was on the formal agenda and and not in the margins. I would be equally surprised if Sam’s assertion that “shipping organisations, which include Bimco and the International Chamber of Shipping (ICS), are pushing for a bunker fuel levy to go to a decarbonisation research and development fund” is not correct. Carbon levies have most definitely “been back in shipping headlines in recent months”. There is no mention of a formal submission.

      So, facts checked and all appears ok. Apologies if have I missed something essential. I’m sure Sam can rise to his own defence if I have.

      The point remains that formal discussion on MBM’s is needed and needs to be accelerated. We welcome the industry’s participation in determining the best use of instruments and their views on how best the revenue generated can be most equitably applied, the crisis faced by the most climate vulnerable being the paramount determinate. My earlier point on what the IMO has already committed to in this regard remains relevant .

  3. Avatar
    PeterB
    November 13, 2019 at 6:02 pm

    Taxes on smoking are used for health care.
    Taxes on car fuels are used for social security.
    So if intake of taxes will be less throuhg less consumption, there will be a financial deficit. –> New taxes need to be found.
    But: Goal of above are human health aspect, social care and necessary jobs, where we all coexist with each other. But still it needs to be financed.
    (something UN forgets deliberately, worldwide speaking).
    Life for everybody ‘working’ among us has become more expensive; less of the salary remains for all of us.

    Taxes on bunker are used for decarbonisation, infrastructure for new fuels and other technologies, all for shipping. Super ! … Yes, less bunker will be used, yes, new jobs will be created, and yes, everything will be more expensive for all of us ‘working’, the others ‘not working’ are indirectly paid by the ‘workers’.
    Finally, in this case, the benefit is not health and social care which considers us all, but jobs with multinationals.
    CO2 is the chicken with the golden eggs.
    Everyone wants such a chicken.
    The world’s most powerful people will benefit first.

    What we know also:
    CO2 is essential for vegetation to grow and at the same time produce oxygen.
    Fossil fuels are – as we all know – taken from the earth where we know that the origin of it is vegetation.
    Burning prehistoric vegetation is similar to a quick form of composting, the same happens, if vegetation decomposes, carbon contained escapes as gas. It gives back vegetation that, which was taken from vegetation a long time ago by sedimentation.
    With more CO2, plants will grow faster, more vegetation, more food for earth’s creatures, including people.
    Furthermore the earth temperature does not follow CO2 levels in the atmosphere, as many real studies show, but follows cyclically occuring changes. In the past 700.000 years there were more dramatic ups and downs in earth surface temperature, NOT related to human-related CO2.
    The arctic ice cap – up to Paris – did not disappear because trolls with ‘bunsen’ (Propane/butane) burners or with the more powerfull CNG burners.
    Strangely, ‘nobody’ came to the conclusion that the sun warms our earth…
    … finally knowing that the chicken with the golden eggs will benefit multinationals, and provide authority jobs that will us cost our money.
    If you care about CO2…:
    Did you know that taking out sulphur (sulfur) from crude oil and its products can only be done by using the energy of more crude oil and logically producing more CO2?
    There are two reason to reduce bunker fuel for vessels:
    First: Less influence of oil producing countries, living in wealth (Norway included) and seaking to keep prices high.
    Secondly: Where everything is endless, to find alternatives in time to avoid social and political consequences all over the world

  4. Avatar
    Peter Nuttall
    November 13, 2019 at 6:15 pm

    Perhaps I was hasty and am proved a little naive on my assumptions of our capacity to sustain maturity of debate to jointly address an existential crisis.

  5. Avatar
    Anastassios Copitsas
    November 13, 2019 at 8:38 pm

    Fuel Levy as “SHORT TERM” measure to cut GHG: Discussion at IMO:
    “Short term” is NONSENSE: Bunker Levies in Shipping can only be imposed by States having ports of call. Implications of discord between States on levies, a domino effect on freight rates and a trade disruption between developed and developing nations, are a reality.
    The Levy will go to a decarb R&D fund. If fund is agreed, it will take years to establish and allocate the funds to awarded entities, before any research could start!
    Behind the seclusion of the Maritime Industry Corporations and Organizations, this controversial issue highlights Lobbyist interests for market dominance rather than keen environmental concerns: Ships are not private cars. A proposed levy shaped and regulated by Shipping itself is an utopia, or an onset for Corporations becoming less competitive in an antagonistic “dog-eat-dog” field of less fair competition under the current IMO Regulations
    LNG Lobby, against ULSFO and Scrubber/HFO Lobbies, or IMO Lobby A against IMO Lobbies B or C members.
    Lobbyist Shipping cannot regulate itself away from ratified International Regulations, Trade Rules and Flag States requirements.
    Technology Innovators already dedicate funds to win Market share.