June 29, 2023

US ‘still on the fence’ as nations debate global shipping emission tax

Government negotiators gather in London are deciding whether to push forward a global levy on emissions from the shipping sector to fund climate action, but the US has so far declined its support.

When asked about the tax during a press conference in Paris on Friday, US treasury secretary Janet Yellen said it was a “very constructive suggestion” and “something the United States will look at”.

But the US was not among the 22 countries who put their names to a statement backing the idea at the Paris summit.

A group of Pacific islands and others have been pushing for a levy for several years at the UN shipping agency, known as the International Maritime Organization (IMO).

Over the next two weeks, government negotiators are meeting at the IMO’s London headquarters to decide whether to include a levy on shipping emissions in their list of measures to respond to climate change.

Most of the world’s products are moved abroad by ship, often using very polluting bunker fuels. The sector is responsible for around 3% of the world’s emissions, roughly the same as Germany.

The group of nations signing up to support a levy in Paris includes the European Union, several small island states, Vietnam, Kenya and major shipbuilder South Korea. More countries have indicated support in the IMO but were not at the meeting in Paris.

The US government has not explained its stance, either in public or at the behind-closed-door IMO talks this week. The State Department did not reply to Climate Home’s request for comment.

One delegate to the IMO talks, from a nation that supports the levy, told Climate Home the US was “still on the fence”.

E3G analyst Ronan Palmer said the US was not opposed to a tax but, with presidential elections next November, it “is just not going to move for it’s own political reasons”.

“If Biden gets up and says we need this tax for climate, imagine what [leading Republican presidential candidate Ron] De Santis is going to say,” Palmer said.

Aoife O’Leary, head of the shipping think tank Opportunity Green, said US concerns that a tax would have to be put to Congress were unfounded. The US’s domestic law to prevent pollution from ships, signed in 1980, allows amendments to the international convention which governs shipping emissions without approval from Congress, she said.

As a major polluter, O’Leary added, “the US has a large moral responsibility to support this levy”.

Delaine McCullough, shipping lead at US-based campaign group Ocean Conservancy, said she thought the US would only support a levy if it was combined with a fuel standard, which tells shipping companies they have to make their fuel cleaner each year.

She said her understanding was that the US government felt that shipping companies would just pay the levy and not change to cleaner ways of operating.

But a levy high enough to change their behaviour would be difficult to get agreement on for “political” reasons, she said.

Last year, governments agreed that they would put a price on shipping emissions. But they have not agreed what form this would take or how much should be paid.

Alternatives to a levy include a system where emissions are capped and anything above that cap is traded or a reward system for reducing emissions.

A group of Pacific islands are calling for a levy with a carbon price of $100 a tonne on bunker fuels, while the world’s biggest container shipping company Maersk has called for a $150 a tonne levy.

But the shipping industry’s trade association has previously supported a levy of just $2 a tonne of fuel to fund research and development of clean shipping technology.

Some nations, particularly in the developing world, are calling for the money to be spent not just on cleaning up the industry but on other climate projects.