A new study by Transport & Environment (T&E) has underscored the urgent need for a global greenhouse gas (GHG) levy on shipping, as the International Maritime Organisation (IMO) debates measures to reduce the industry’s emissions.
The analysis by T&E, a European non-governmental organisation campaigning for cleaner transport, found that proposed penalties and surplus units (SUs) under the planned global fuel GHG standard (GFS) would not sufficiently enforce the ‘polluter pays’ principle.
The GFS, supported by the EU and Japan, aims to set increasingly stringent minimum fuel/energy GHG intensity (GFI) requirements and introduce a penalty system allowing ships to ‘pay-to-comply’ via remedial units (RUs) if they fail to meet GFI targets. Ships exceeding these targets can generate SUs, which can be sold to other ships.
However, T&E’s study revealed that even under an ambitious GFS pathway and high RU usage, the majority of shipping GHG emissions would remain unpriced in the coming decades. The analysis showed that most emissions would escape the ‘polluter-pays’ principle until 2050, even with the strictest proposed GFI trajectory.
Faig Abbasov, shipping programme director at T&E, said: “The findings are clear: the proposed GFS penalties and surplus units are not enough to make shipping companies pay for their pollution. A global GHG levy is essential to ensure the industry contributes its fair share to tackling the climate crisis.”
The study found that a significant proportion of emissions would only be priced in scenarios where many shipping companies opt to ‘pay-to-comply’ instead of meeting GFI targets, leading to higher emissions that would not align with the IMO 2023 Strategy.
T&E’s analysis bolsters arguments by some IMO members and environmental groups that a separate GHG levy is crucial to complement the GFS and ensure the shipping industry adequately addresses its emissions.
The study assumes a constant energy consumption of the fleet at levels projected for 2030, with demand for shipping estimated by averaging high and low trade growth scenarios from the IMO 4th Greenhouse Gas Study. It also assumes that SUs and RUs cannot be banked or transferred between years.
As the IMO continues to debate these measures, the findings highlight the importance of implementing a robust and separate carbon pricing mechanism to hold the shipping industry accountable for its emissions and contribute to global climate change mitigation efforts.
