Marine Carbon Tax Up For Debate

The shipping industry is braced for further hikes in the cost of freight, which have already soared to record levels in the past 18 months. The Marine Environment Protection Committee (MEPC) meeting is set to discuss a new Carbon Tax for shippers, which might mean that extra costs will eventually be passed onto customers.

Sea News reports that the tax is designed to encourage shipping firms to switch to lower carbon fuels, and make it more economically viable for companies to make greener fuel choices. The so-called Carbon Tax is part of a range of initiatives that the International Maritime Organisation (IMO) has been trying to introduce to meet carbon net zero targets.

However, global shipping companies, who export and import cargo across the world’s international shipping routes, have raised concerns. The Director of the Global Shippers Forum (GSF) James Hookham told Sea News: “Shippers will be forgiven for thinking that the proposal, and its consideration at the IMO will inevitable result in still higher freight rates.”

“That’s because the shipping industry has a very efficient mechanism for passing through higher fuel costs in the form of BAF; a surcharge to cover variations in fuel price. There are few reassurances in the existing proposals that a Carbon Tax won’t just be passed through as an added cost for shippers.”

He adds: “If the shipping industry is serious about Market Based Mechanisms as a route to decarbonisation then it needs to insulate its customers from their inflationary effects otherwise emissions will be reduced by suppressing demand for world trade rather than by incentivising the step-changes in fuels and propulsion technology, so urgently required.”

Mr Hookham may be pleased to learn that the UK government has recently announced £12m funding to accelerate the research and development of green shipping technologies. It is an element of the Clean Maritime Demonstration Competition (CMDC), which is a part of the UK government’s wider ambitions to achieve carbon net zero by 2050.

UK Haulier reports that one of scheme’s aims is to provide zero-emission domestic ferries, which will reduce the current levels of about 1 million tonnes of carbon dioxide emissions from roll-on/roll-off ferries (designed to transport vehicles and used for heavy equipment shipping) and passenger ferries produced each year.

Robert Courts MP, Minister for Maritime said: “I want to see a new green age for maritime travel that is free from emissions. Following the success of last year’s competition, this second round has been designed to support a shipping future that uses the most creative and innovative ways for people and goods to sail in cleaner and greener ways.”

He added: “At COP26, we pledged to create a green maritime legacy for generations to come, and UK SHORE puts us at the forefront of the global green maritime revolution – supporting thousands of green jobs around the country.”

UK SHORE has already seen the largest investment ever in UK maritime, with £206 million of research and development funding available to develop the greener technologies of the future.