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Carriers Face a Sea of Green

By William DiBenedetto, CBN Feature Editor

While ocean carriers and ports scramble to cut their greenhouse gas emissions to comply with various regulations, international organizations want them to do even more — by paying a carbon tax.

For example, as the nations of the world prepare for the major climate change summit COP21 in Paris later this month, the International Transportation Forum, an intergovernmental body of the Organization of Economic Cooperation and Development, is calling for a carbon tax on ocean shipping of about $25 per ton of CO2 to curb emissions in the coming decades. On top of that, the ITF says operators should reduce their carbon emissions by one-half over the next 35 years, and get to zero emissions by 2080.

"The impact on maritime trade would be marginal if the tax were set at around $25 per ton of CO2," ITF said in a report. The forum added that the receipts of a carbon tax could provide a "substantial source" of financing – about $26 billion – for the UN’s Green Climate Fund, and also return a portion of that money to poorer nations.

The ITF tax proposal is not exactly popular in shipping circles. In a statement last month, the International Chamber of Shipping, which represents ship operators worldwide, said the tax would be "almost three times higher than the carbon price paid by shore-based industries in developed nations."

ICS Secretary General Peter Hinchliffe added, "While shipping may currently have CO2 emissions comparable to a major OECD economy, it is inappropriate for the ITF to propose that the industry should be treated like an OECD economy."

ICS emphasized that that the shipping community is "committed to reducing CO2 and has a responsibility to contribute to the achievement of the United Nations’ ‘2 degree’ climate change goal." But the UN Framework Convention on Climate Change (UNFCCC) has recognized that "developed and developing nations should accept differing commitments, and shipping is no different, especially in view of its vital role in the movement of about 90 percent of global trade."

However, ITF’s report noted, "It would be odd if countries are expected to adhere to emission targets but not the shipping sector, especially since it would be impossible to apportion shipping emissions to countries."

"We do expect that sooner or later shipping will be regulated on CO2," said John Kornerup Bang, lead advisor on climate change with Maersk Group, owner of the world’s largest container shipping fleet. "Some carriers would be better at managing it than others," he said in a Reuters article. Maersk says it plans to reduce vessel CO2 emissions 60 percent by 2020.

According to the International Maritime Organization, shipping reduced CO2 emissions to 2.2 percent of the world’s total from 2.8 percent in the five-year period to 2012. But the IMO study projects CO2 shipping emissions could grow about 50 percent by 2050 depending on the pace of world trade and what actions are taken to curb emissions.

Ship emissions were omitted from national commitments under the UN’s 1997 Kyoto Protocol, which ceded control over the sector’s emission reductions to the IMO at that time.

Until recently, nations have generally been reluctant to take on the shipping sector on emissions in a unified way, fearing that regulations would be unwieldy to administer while potentially impacting the majority of the world’s global trade. Those days appear to be over, however.

It’s time for Plan B and maybe more. One such plan became apparent recently as 190 containerships, totaling more than 2 million TEUs, were ordered by operators during the first nine months of this year — more than the annual amount ordered in each of the last seven years, according to an Alphaliner report.

The reason? Ship orders must be placed before the implementation of the IMO’s new Tier III regulations on ship emissions. Ships with keels laid before January 1 are not required to face costly compliance mandates under new UN regulations, which cover NOx emissions.

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