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Emission trading for shipping

Ship transport continues to grow. In 2009 shipping is likely to be responsible for 2.7 percent of the world’s total CO₂ emissions. In 2020 the proportion may increase to 6 percent and in 2050 to as much as 18 percent. Nevertheless, international shipping is exempt from fuel duties, and ships can operate using cheap, polluting heavy oils. This is essentially subsidizing pollution.

There are many reasons for this. Shipping is global and therefore must be regulated globally. The UN’s shipping organisation, the International Maritime Organization (IMO) currently develops most shipping regulations. But when very different countries with very different interests are to arrive at common solutions in IMO, the road is often long and complex.

An additional challenge is that shipping is represented in IMO by the countries in which ships are registered. These are typically small countries with significant revenues from shipping, which often act on behalf of ship owners rather than protect the environment. The largest flag states, so-called flags of convenience, resist and block many suggestions for improvements. This is an important reason why IMO has not managed to reduce or limit emissions from shipping and why Bellona and many others would like a more democratic body to set environmental objectives for the shipping industry.

When it is essentially free to pollute, it is difficult to provide incentives for environmental improvements. Many of the good solutions that are available today are therefore not implemented. For this reason, the ships must be put into a global emissions trading system or pay fuel taxes . To get an IMO-based solution to work, all ships must be treated equally, regardless of the country in which they are registered. If duties vary according to where ships are registered they will simply change flags. Many people are actively proposing that ships registered in poor countries should be exempt from emissions reductions. It is essential to establish regulations that treat all ships equally while at the same time protecting the interests of poor countries. Among other solutions, incomes from emission trading and environmental taxes could go to poor countries and traffic between developing countries could be given a transitional exemption from the regulations.