No country can be left behind in shipping’s energy transition: what we need now is an ambitious levy on greenhouse gas emissions 

Press Release

  • Environmental NGO Opportunity Green calls for countries to support an ambitious levy on shipping’s GHG emissions at the upcoming discussions at the International Maritime Organization (IMO). 

  • Pricing shipping emissions is the sector’s clearest route to a just and equitable transition that will support the countries and people most affected by climate change. 

(London, 7th March) Following on from the adoption of the revised IMO GHG Strategy last July, we are now at a critical turning point: adopt the right global measures to phase out shipping’s greenhouse gas (GHG) emissions, or risk losing sight of the 1.5°C Paris Agreement temperature goal. With the upcoming 16th Intersessional Working Group on Greenhouse Gas Emissions (ISWG-GHG 16) and the 81st Marine Environment Protection Committee (MEPC 81), 2024 will be a fundamental year on the journey to determining what these measures will be, before their approval and adoption in 2025.  

Central to these measures is the proposal that polluters pay their fair share for the transition through a levy, which puts a price on shipping’s GHG emissions. This will support the phase out of emissions, create a market for alternative fuels and – crucially - generate new and additional funds to spearhead shipping’s global transition to zero emissions and support the world’s most climate vulnerable countries to enable a just and equitable transition.  

Ana Laranjeira, Senior Shipping Manager at Opportunity Green says:  

“If we are to stand a chance at keeping the 1.5°C goal within reach in a way that is just and equitable, the IMO must develop and adopt an ambitious levy by 2025, alongside a strong technical measure. Holding polluters accountable is critical, and a levy would not only prompt a shift to green energy and reduce emissions, but also provide much-needed funding to ensure that no country is left behind in this transition - particularly those frontline countries, bearing the most negative impacts of the climate crisis. That’s why we are calling for countries to vocally support an ambitious levy on shipping GHG emissions at the upcoming IMO discussions, such as the one put forward by the Pacific Island states and Belize, with part of the revenues going towards climate vulnerable countries.” 

This levy is the most ambitious option currently on the table. This proposes a price of at least $150 per tonne of greenhouse gas emissions. A levy such as this would: 

  • Get polluters to pay their fair share, for the impacts caused by their emissions 

  • Financially support climate vulnerable countries to achieve a just and equitable transition 

  • Generate substantial revenues of billions of dollars a year 

  • Help close the price gap between conventional and alternative fuels, and create the market for sustainable zero-emission fuels and technologies  

  • Help fund the development of zero-emission technologies. 

Over 80% of traded goods are carried by sea and the international shipping sector currently produces 1 billion tonnes of GHG emissions each year, and yet shipping remains an incredibly undertaxed sector. While the average corporate taxation rate for OECD countries is 23%, two of the biggest names in shipping — Maersk and CMA — paid an effective tax rate of 2% on their profits, while Hapag-Lloyd paid an effective rate of 0.4% of its $8.6bn profits in the first half of 2022.  

Analysis of global economic impacts from climate change projects an average annual GDP loss of between 0.75% - 6.5% by 2030 for Pacific Small Island Developing States (SIDS), compared to the global average of 0.5%.  

To fully decarbonise the sector, the levy must be adopted alongside a “technical measure” – most likely a global fuel standard. This will give shipping a clear set of enforceable policies to regulate and reduce GHG emissions and provide the right incentives to encourage investment in and development of fossil-free fuels and technologies. Clear guidance is key and will help us avoid false options, such as LNG, which is not a clean solution and does not contribute to the reduction in emissions that we need. 

Ana Laranjeira concludes, “For many developing countries, shipping is a lifeline to get access to vital goods. However, the sector’s growing emissions are also further exacerbating these countries’ climate vulnerability. Already, the ever more frequent extreme weather events in these countries are leaving a trail of destruction in their wake, yet most of these countries do not have sufficient resources to bounce back from these impacts. It seems a no-brainer to put a levy on international shipping and ensure that part of the revenues it generates go to climate-vulnerable countries to further a just and equitable transition.”  

ENDS 

 

Notes to editors 

Opportunity Green is an NGO working to unlock the opportunities from tackling climate change using law, economics, and policy. We do this by amplifying diverse voices, forging ambitious collaborations and using legal innovation to motivate decision makers and achieve climate justice, with particular emphasis on the aviation and shipping industries. 

Since October 2022, Opportunity Green has been working bilaterally with a number of ambitious climate vulnerable IMO Member States – working collaboratively with their London Embassies and/or capitals, towards building their capacity to actively participate in these meetings, including ISWG-GHG 16. Our work with these countries includes inter alia, developing unbiased information briefings ahead of the IMO meetings, providing ad-hoc legal and policy advice, and facilitating networking opportunities.   

 

Media contacts: 

Hannah Jolliffe 

Communications Manager, Opportunity Green 
hannah@opportunitygreen.org  

Ana Laranjeira 
Senior Shipping Manager, Opportunity Green  
ana@opportunitygreen.org