France Pushes for Global Tax on Maritime Sector Greenhouse Gas Emissions
The French government is campaigning for a global tax on greenhouse gas (GHG) emissions from the maritime sector as part of efforts to combat climate change. The country aims to form a coalition of nations to push for the tax ahead of the upcoming summit hosted by President Emanuel Macron. Several sources have revealed that France wants to collaborate with other countries to put out a joint appeal to members of the United Nations International Maritime Organization (IMO) to agree to the levy.
Many other countries support the initiative, including Denmark, Japan, Kenya, Panama and Mexico, and the Solomon Islands and Marshall Islands – both of which have been rallying for the tax for years. If successful, the call would be a key outcome of Macron’s summit, which will focus on climate finance and comprehensive reforms.
The IMO will soon hold a meeting to determine new targets for cutting emissions from the shipping sector. Although maritime transportation accounts for up to 90% of global trade, it still significantly relies on fossil fuels and has been slow to decarbonize by measures such as regulation. A previous IMO goal was to reduce annual GHG emissions from shipping by 50% between 2008 and 2050. However, the target fell short of net-zero ambitions in other sectors.
Industry lobbyists, as well as some member states with large maritime industries, voiced objections to tougher measures in earlier talks. For instance, countries such as Argentina, Saudi Arabia and China have been reluctant to support the imposition of a tax. The IMO usually makes decisions based on consensus among its members, but it can also rely on a majority. Avalon, a maritime software company, points out that there have been “long-time debates regarding how global regulations governing GHG emissions from ships should be adopted and if so, enforced.”
The European Union (EU) already plans to include shipping in its emissions trading scheme, where shipowners who navigate European waters will pay for their pollution. However, if a GHG levy is adopted during the IMO meeting scheduled for next month, it could further impose a financial burden on shipping emissions worldwide. The tax is likely to impact leading container shipping groups like France’s CMA-CGM, Denmark’s Maersk, and Switzerland’s Mediterranean Shipping Company.
It is still unclear what form the shipping fee will take, but a proposal by the Solomon Islands and the Marshall Islands that entails a $100-per-tonne emissions tax appears to be the most advanced and was discussed in French-hosted working groups before the summit. Under this proposal, the funds generated could be allotted towards developing new fuels and helping countries deal with climate change’s impact, among other uses. Last month, a group of African nations declared they would support a shipping levy, using some of the proceeds to help developing countries combat climate change.
The expected announcement from the French summit is unlikely to suggest a specific fee level or dictate the uses of the funds. These issues should be addressed later at the IMO meeting. Various experts believe that a tax is bound to be introduced due to growing support from countries, companies and trade bodies. However, the critical question now is what the levy will be for.
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Summary
The French government is pushing for a global tax on greenhouse gas emissions from the maritime sector to combat climate change. The country intends to build a coalition of multiple nations and appeal to members of the United Nations International Maritime Organization for the tax’s passing at its forthcoming meeting in July. Countries such as Denmark, Japan, Kenya, Panama, and Mexico, as well as the Solomon Islands and the Marshall Islands, back the initiative.
If successful, the decision would be a key outcome of President Emanuel Macron’s climate finance summit in June. The shipping sector accounts for as much as 90% of global trade, but it still depends heavily on fossil fuels. Shipping has lacked initiative in decarbonizing its infrastructure. While setting earlier goals to decrease GHG emissions by 50%, shipping still fell short of net-zero emissions in other sectors’ ambitions.
During earlier talks, industry lobbyists and member states with large maritime industries rejected stricter measures. Countries like Argentina, Saudi Arabia, and China have been reluctant to support the imposition of a tax. The IMO usually reaches decisions based on consensus among members, typically relying on unanimous decision-making. Although there is tension on how to adopt global regulations governing GHG emissions from ships, compulsory regulations are essential, according to maritime software systems company Avalon.
The EU has already included shipping in its emissions trading system, where pollution from navigation through European waters is charged. However, if a GHG levy is introduced, it could impose a financial burden on shipping emissions worldwide. The tax is likely to impact major container shipping firms such as France’s CMA-CGM, Denmark’s Maersk, and Switzerland’s Mediterranean Shipping Company.
It is still uncertain what form the shipping tax will take, but a $100-per-tonne emissions tax proposal by the Solomon Islands was discussed in the French-hosted working groups leading up to the summit. If the levy is implemented, funds generated could be allocated towards developing new fuels and assisting countries dealing with the effects of climate change. Recently, African nations expressed their support for a shipping tax to help other developing countries deal with climate change.
The outcome of the French summit will not suggest a specific fee level or dictate how the funds will be used, as this should be addressed later during the IMO meeting. Many experts believe that a tax is likely to be adopted due to growing support from countries, companies, and trade bodies. Nevertheless, the critical question is determining what the levy will be for.
The FT has taken it upon itself to cover the financial, political, and market factors in climate change. Examining how the green energy sector booms, how financial institutions adopt eco-friendly policies, and how geopolitical issues relate to climate change helps investors, policymakers, and climate activists monitor the sector better. Aside from this, FT is also committed to environmental sustainability and encouraging the use of sustainable frameworks, promoting smart regulation.
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France is touting support for a global tax on maritime sector greenhouse gas emissions ahead of a summit hosted by Emmanuel Macron this month.
Several people familiar with the discussions said France hoped to work with other countries to issue a joint appeal to members of the United Nations International Maritime Organization to agree to such a levy at its next meeting in July.
France is trying to build a coalition of dozens of nations to support the idea and has enlisted the support of Japan, Denmark, Kenya, Panama and Mexico – along with the Solomon Islands and the Marshall Islands, which have championed the idea for years – has said one of the people who know the situation.
If finalized, the call would be a key outcome to emerge from Macron’s summit for a new global financing pact, a two-day event the French president will co-host with the Barbadian leader on June 22 and 23 on climate finance and finance comprehensive reforms.
A French diplomatic official said: “This is an initiative that some of our partners have supported for a long time and this summit will offer them an important political platform. It is undeniable that we will need new sources of income to finance the fight against climate change, which is why we will support this initiative”.
The boost in pressure comes ahead of an IMO meeting next month to discuss new targets for reducing emissions from the shipping sector. Shipping, which carries up to 90% of global trade and relies heavily on fossil fuels, is a major polluter, but critics say it has been slow to decarbonise due to insufficient regulation.
The maritime organization has previously set a goal for shipping to halve annual greenhouse gas emissions between 2008 and 2050, falling short of net zero ambitions in other sectors.
People present at earlier talks said industry lobbyists objected tougher measures, as well as some Member States with large maritime industries. Countries including Argentina, Saudi Arabia and China have been reluctant to support a levy, they say.
The IMO typically makes decisions based on consensus among its members, but it can also rely on a majority, said Tristan Smith, a maritime researcher at University College London.
The EU already has plans to introduce shipping into its emissions trading scheme, under which shipowners traveling through European waters will pay for their pollution. But an agreement on a greenhouse gas levy at next month’s IMO meeting would impose a financial cost on shipping emissions globally.
If such a carbon tax were introduced, it would hit container shipping giants such as Switzerland’s MSC Mediterranean Shipping Company, Denmark’s AP Møller-Maersk, France’s CMA-CGM and their customers.
However, it is unclear what form a shipping fee would take. A proposal by the Solomon Islands and the Marshall Islands, which are particularly prone to sea-level rise, for a $100-per-tonne emissions tax is seen as the most developed and was discussed in French-hosted working groups ahead of the summit.
Under the islands’ proposal, the money generated could be used to develop new fuels and help countries deal with the impact of climate change, among other uses.
Last month a group of African nations said they would back a shipping levy used in part to help developing countries tackle climate change.
But the French official said the summit’s expected announcement was unlikely to call for a specific level of levy or dictate how the funds would be distributed. These issues should be addressed later at the IMO.
Aoife O’Leary, chief executive of the non-profit Opportunity Green and an observer at the IMO, said a tax was “very likely” to be introduced due to growing support from countries, companies and trade bodies. But he added: “The question now is what is the levy and what is it for?”
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