The News
Some of the world’s most important shipping nations backed a flat tax on the industry’s carbon emissions.
Liberia and Panama, home to the world’s biggest shipping registries, along with 43 other jurisdictions — accounting between them for 66% of the world’s total tonnage — agreed to the proposed levy on shipowners. Brazil, China, and the US opposed the deal, but the wide support boosts the chances that a global agreement could be reached.
The shipping industry produces around 3% of total emissions, equivalent to the airline sector, and proponents hope a flat tax will push shipowners to use low-emission fuels or other clean alternatives.
SIGNALS
Shipping has enjoyed decades of low regulation
Shipping is a highly efficient method of transport that global retailers like Amazon and Ikea rely upon to carry goods quickly and cheaply, effectively enabling the modern consumer lifestyle many in the Global North enjoy. However, the industry “has been underregulated for decades,” a climate policy expert told The New York Times, largely because international trade routes do not fall under the jurisdiction of any single country. A global tax on emissions could generate around $100 billion a year to help poorer countries cope with climate change, Reuters reported. The container giant Maersk thinks consumers will be willing “to pay a premium for greener transport,” the agency wrote.
Details of the tax are still unclear
Though the levy has been in talks for years, the fact that Liberia and Panama have now backed it “is really significant,” even without support from some major exporters like China. However, there is disagreement on details of the proposed tax, in particular, how much to charge: Liberia has backed a fee of just $18.75 per ton of emissions, while the Marshall Islands — who have the third largest shipping registry and are particularly at risk to climate change-induced sea level rise — want to charge $150 per ton. Low taxes are part of what draws companies to register in nations like Liberia, however, as one shipping expert told the outlet: You don’t get an energy transition without a levy of between $100 and $150, as well as rewarding Net Zero ships.