Pacific $150 levy gets top mark among IMO proposals, research group says
Carbon Market Watch says China’s proposal would disincentivise decarbonisation as it lacks a real economic element
The research group rated the Pacific Islands’ levy proposal the highest among candidate mid-term economic measures, while China’s proposal was not rated due to the absence of a substantial economic element
THE Pacific Islands’ $150 per tonne of CO2 equivalent levy proposal received the highest rating (A+) among candidate mid-term emission reduction measures under consideration at the International Maritime Organization this week, according to new research by Carbon Market Watch.
The research group noted that the Pacific levy proposal focuses on achieving zero greenhouse gas emissions from shipping, and its direct implementation without phase-in periods earned extra points for clarity.
“For its focus on supporting climate-vulnerable nations, the proposal receives high marks, but could be further improved by better addressing the just transition for workers. Incorporating provisions for the retraining and reskilling of workers in levy-funded areas would enhance the proposal’s impact.”
Carbon Market Watch did not rate the proposal by China, Norway and other states because of its “unsuited and insufficient” economic element. China and its co-sponsors tabled an integrated fuel standard with flexible compliance options acting as its economic element.
“This standalone flexibility compliance mechanism would effectively blow climate action out of the water and enable ship owners on or below the GHG intensity trajectory to torpedo the polluter pays principle, thereby disincentivising decarbonisation.”
China’s proposal would create the least revenue among other measures at $500m-$900m per year in 2027-2030, DNV said. The Pacific Islands’ $150-$300 levy would create revenues of up to $127bn per year in the same period, while a $30-$120 levy would generate up to $32bn, according to DNV.
Carbon Market Watch rated the EU27 and Japan’s joint $100 levy proposal B, arguing that the proposal lacks clarity for 2030, 2040 and 2050.
The research group argued the EU27 and Japan’s proposal should significantly increase revenues directed towards research and development, as well as least developed countries and small island developing states.
It rated the International Chamber of Shipping’s proposal with the Bahamas and Liberia C, as it found its “illustrative $18.75 per tonne of CO2 levy ‘too low’” to discourage the use of polluting marine fuels.
“The proposal should abandon the tank-to-wake approach in favour of the more comprehensive well-to-wake framework.”
