What Are Carbon Emissions and Why Do Container Lines Want to Charge a Fee for Them?
While the EU has come up with a carbon emissions trading scheme to reduce the world’s effects toward climate change, container lines are proposing a different idea for the shipping industry. Here we will go over the two sides, but first, let’s take a look at carbon emissions.
Emissions: Sources and Obstacles
Carbon (CO2) emissions originate from the burning of fossil fuels such as coal, oil, and natural gas. As they accumulate in the atmosphere, they remain there for decades, trapping the heat of the sun like a greenhouse. Other gases also cause this greenhouse warming, but carbon is the most prevalent and thus of the highest concern in the fight against climate change.
Harmful fossil fuels are used in practically every step of the creation and transportation of products, from the machines mining resources to the power plants running factories. Some parts of the process, such as factories, can switch to sustainable alternatives by using power plants feeding off solar arrays or wind farms. However, ships traversing the ocean have little in the way of alternatives as they are completely mobile, making it difficult to reduce their emissions.
The EU’s Trading Scheme
The third International Maritime Organization greenhouse gas study in 2014 showed that the shipping industry emitted about 3.1% of all CO2 emissions from 2007 to 2012. IMO also predicts that this percentage will continue to climb to about 10% by 2050 if changes are not made.
The EU’s goal is to reduce emissions by 55% by 2030 and reach climate neutrality by 2050. The steps for reaching these goals include a “cap and trade” emissions trading system. This system creates a market for carbon by setting a cap on total emissions and then allowing entities to purchase and trade emissions allowances. Currently, the trading system includes the maritime industry—but perhaps this might not remain for long.
The Shipping Industry’s Alternative Fee Proposal
The largest maritime trade groups have made it clear that they support accelerating efforts to reduce maritime carbon emissions; however, they do not think the EU’s plan is a good fit to get the job done. Instead, they are proposing an industry-wide use of “market-based measures,” including carbon fees along with the support of a $5 billion fund for researching sustainable alternative fuels appropriate for the shipping industry.
The trade groups claim the EU’s trading system would only distort the market without helping to advance these needed sustainable alternatives. Putting a price on carbon through a fee, on the other hand, would push commercial ship owners and trade groups to make investments in research and change.
The trade groups have submitted a proposal to IMO asking to discuss and negotiate the alternative measure. If all goes well, IMO will commence discussions with groups from the industry before 2023.
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