3 July 2023 (Lloyd's List) - CHINA has been leading opposition to a greenhouse gas levy for shipping at the International Maritime Organization, as delegates have discussed the revision of the United Nations agency’s GHG strategy on the opening day of the Marine Environment Protection Committee.
China’s opposition to a levy is based on potentially adverse effects on developing nations, although there is strong support for such an economic measure seen as the simplest solution.
Up to 36 member states supported a levy at the IMO’s intersessional working group on reduction of GHG emissions from ships last week, while 18 countries were in opposition, according to a readout of the working group by maritime consultancy UMAS.
China submitted its own proposal for an economic measure ahead of MEPC80 and it includes a penalty for vessels that emit more GHGs than a pre-determined threshold. Funds would be used to reward ships that emit less than this threshold. The Chinese proposal represents a mini emissions trading system for vessels, as it allows trading of allowances between ships. Critics of the Chinese proposal believe it doesn’t offer meaningful support for the least developed countries and small island developing states.
Other countries, including Brazil and Venezuela, have also voiced concern over the potential impacts of a levy on developing nations. Brazil proposed a fund and reward system to collect funds based on the IMO’s existing Carbon Intensity Indicator, although CII is heavily criticised by parts of the industry.
It aims to collect contributions from ships with CO2 emissions above an upper benchmark, to reward vessels with CO2 emissions below that level, using CII ratings.
Member states are expected to adopt guidelines on lifecycle GHG intensity of marine fuels, also called LCA, this week at MEPC80. Most of the countries supported the incorporation of LCA guidelines with the finalisation of the basket of mid-term measures. That could mean that mid-term measures under development would be designed for reductions on a lifecycle GHG emissions basis.
There is also momentum behind complementing a global fuel standard with some form of carbon pricing, with the EU countries’ global fuel standard submission seen as the most mature proposal and with the highest level of member state support.
The EU proposal aims to set a global fuel standard that will reduce the GHG intensity of fuels, while providing long-term certainty for fuel suppliers and buyers. The fuel standard will require all ships above a certain size to use fuels that have full lifecycle GHG intensity at or below a certain limit.
