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Comment: There no need for a "purpose of comparison" and trivia about being the fifth largest carbon emitter. Please stick to which information is reported on by reliable sources, without synthesizing, and ensure that all contestable information has a citation. Utopes (talk / cont) 19:04, 10 September 2024 (UTC)
Maritime transport makes up 3% of total global emissions. For purposes of comparison, if this sector were a country, it would be the fifth largest emitter.[1] As part of a broader trend of policymaking aimed at reaching the goals set out in the Paris Agreement, both the European Union and the International Maritime Organization (IMO) have begun to implement or explore ways of reducing the carbon emissions produced by shipping.
Carbon pricing is widely regarded as a cost-effective way to reduce emissions.[2] In 2023, the European Union’s Emissions Trading Scheme (EU ETS) was expanded to include the shipping sector. That same year, the International Maritime Organization, the UN agency responsible for regulating maritime transport, agreed on a strategy to bring emissions from shipping to net zero “by or around” 2050.[3] Though the details of this are still under discussion as of late 2024, this strategy includes the implementation of a carbon price.
Overview
editA key challenge in shipping decarbonization is the price differential between conventional bunker fuels and zero-carbon ones.[4] In addition, the sector is subject to a “chicken and egg dilemma,” whereby potential zero-carbon bunker fuel suppliers wait for shipowners to begin using low-carbon fuels before they invest in infrastructure to supply it, and shipowners wait for the infrastructure to be put in place before investing in converting to a greener fleet.[5]
Putting a price on GHG emissions from shipping can help to close the price gap between these fuels, making zero-carbon fuels more competitive. In addition, a GHG price can also reduce rebound effects, whereby improvements in the energy efficiency of vessels result in greater use of shipping as a means of transport.[6]
Concerns have been raised by some countries at the IMO that applying such a carbon price will have a disproportionately negative effect on developing countries, for instance by reducing their export and import opportunities.[7] However, a review of empirical research indicates that the impact of such a carbon price on GDP may be limited.[8] In addition, it is likely that other measures to decarbonize international shipping would also have a negative impact on trade. This impact may be higher than that of a GHG price, because carbon pricing tends to be a cost-effective measure.[9]
EU Emissions Trading Scheme
editThe EU ETS applies a carbon price to emissions by issuing a limited amount of ‘allowances,’ which can be traded.[10] In order to make up for any emissions released, a company is required to surrender the equivalent amount of allowances. This, in theory, allows the EU to cap the total amount of emissions produced in the bloc. In the case that one company or facility has more allowances than it needs, it can sell these to a company that requires more.[10] This kind of system is known as ‘cap and trade.’ In 2023, it was decided that this system would apply to the shipping industry from the following year, with the aim to cover 100% of the emissions generated by voyages between EU countries and 50% of emissions generated by voyages between EU countries and countries outside the EU.[11] The inclusion of international shipping in the EU ETS will be gradual. Initially, the EU ETS will cover only 40% of the emissions, and it will be gradually expanded over time.[12] Most of the revenue generated by this scheme is given back to EU member states, who are obliged to use it on climate-related spending.
International Maritime Organization
editThroughout its history, the IMO has introduced a number of measures to reduce the environmental impact of shipping, with the first CO2 reduction measure implemented in 1997.[13] As of late 2024, discussions are underway at the International Maritime Organization regarding the details of an emission-reduction strategy that includes a carbon pricing system for international shipping. If implemented, this would be the world’s first global carbon pricing system that is not simple an offsetting scheme.[3]
The IMO GHG Strategy outlines a goal of reaching net-zero emissions from shipping by or around 2050, with multiple checkpoints along the way.[14] The IMO GHG Strategy also indicates that the decarbonization of the sector will be achieved via the implementation of a number of measures, which may include a GHG emission pricing mechanism.[13] Discussions are underway as of late 2024, regarding the exact nature of that pricing mechanism. Various policy proposals have been put forward by stakeholders at the IMO, which vary in their level of stringency and flexibility.[15]
The contemporary implementation of an IMO GHG pricing mechanism and the extension of the EU ETS to international shipping may create the situation where GHG emissions from shipping are priced twice.[16]
Carbon revenues and climate finance
editA GHG pricing mechanism applied to it on a global scale is likely to generate a large amount of revenue, up to 40-60 billion US dollars every year up to 2050.[17] As a result of this, there is considerable debate over how such money should be pooled, managed, and spent. One of the key issues in this debate is the degree to which such money ought to be used ‘in-sector,’ (i.e. spent on further decarbonising the shipping industry itself) or ‘out-of-sector.’ (i.e. used as general climate finance)[18][7]
For instance, some IMO stakeholders have highlighted that this revenue opens up opportunities for financing the energy transition in shipping itself, and also offers an opportunity to address concerns over climate justice.[17] Other ways of taking climate justice into account, such as granting exemptions to ports in selected countries, have also been considered, but this opens up opportunities for price avoidance and risks unfairly disadvantaging some countries.[19]
References
edit- ^ Chen, Shun; Zheng, Shiyuan; Sys, Christa (2023-06-01). "Policies focusing on market-based measures towards shipping decarbonization: Designs, impacts and avenues for future research". Transport Policy. 137: 109–124. doi:10.1016/j.tranpol.2023.04.006. ISSN 0967-070X.
- ^ Baranzini, Andrea; van den Bergh, Jeroen C. J. M.; Carattini, Stefano; Howarth, Richard B.; Padilla, Emilio; Roca, Jordi (2017-03-31). "Carbon pricing in climate policy: seven reasons, complementary instruments, and political economy considerations". WIREs Climate Change. 8 (4). Bibcode:2017WIRCC...8E.462B. doi:10.1002/wcc.462. ISSN 1757-7780.
- ^ a b "A First Step Toward a Global Price on Carbon". New York Times. March 28, 2024. Retrieved 2024-09-10.
- ^ Baresic, D., Rojon, I., Shaw, A., Rehmatulla, N. (2022) Closing the Gap: An Overview of the Policy Options to Close the Competitiveness Gap and Enable an Equitable Zero-Emission Fuel Transition in Shipping. Prepared by UMAS, January 2022, London.
- ^ Dominioni, Goran; Rojon, Isabelle; Salgmann, Rico; Englert, Dominik; Gleeson, Cáit; Lagouvardou, Sotiria (2023-06-14). Distributing Carbon Revenues from Shipping. World Bank. doi:10.1596/39876.
- ^ Dominioni, Goran; Englert, Dominik (2022). Carbon Revenues From International Shipping: Enabling an Effective and Equitable Energy Transition - Technical Paper. Washington, DC: World Bank.
- ^ a b Smith, T., Shaw, A., (2023) An overview of the discussions from IMO ISWG-GHG 14, Read-out from UMAS, 24/03/2023 https://www.u-mas.co.uk/wp-content/uploads/2023/03/ISWG-GHG-14-overview-UMAS-.pdf
- ^ Rojon, Isabelle; Lazarou, Nicholas-Joseph; Rehmatulla, Nishatabbas; Smith, Tristan (2021). "The impacts of carbon pricing on maritime transport costs and their implications for developing economies". Marine Policy. 132: 104653. Bibcode:2021MarPo.13204653R. doi:10.1016/j.marpol.2021.104653.
- ^ Dominioni, Goran (2024). "Carbon pricing for international shipping, equity, and WTO law". Review of European, Comparative & International Environmental Law. 33 (1): 19–30. doi:10.1111/reel.12540. ISSN 2050-0386.
- ^ a b "Use of auctioning revenues generated under the EU Emissions Trading System". www.eea.europa.eu. 2023-12-19. Retrieved 2024-09-10.
- ^ "How does the shipping ETS work?". Transport & Environment. 2024-08-08. Retrieved 2024-09-10.
- ^ "Directive - 2023/959 - EN - EUR-Lex". eur-lex.europa.eu. Retrieved 2024-09-10.
- ^ a b Marine Environment Protection Committee (2023) 2023 IMO Strategy On Reduction of GHG Emissions From Ships, Resolution MEPC.377(80), Annex 15, accessed at https://wwwcdn.imo.org/localresources/en/OurWork/Environment/Documents/annex/MEPC%2080/Annex%2015.pdf
- ^ "2023 IMO Strategy on Reduction of GHG Emissions from Ships". www.imo.org. Retrieved 2024-09-10.
- ^ Dominioni, Goran (2024). "Carbon pricing for international shipping, equity, and WTO law". Review of European, Comparative & International Environmental Law. 33 (1): 19–30. doi:10.1111/reel.12540. ISSN 2050-0386.
- ^ Dominioni, Goran; PETIT, Christy Ann (2024-05-10). Shipping's Decarbonization and Border Carbon Adjustment Mechanisms: A Case for Regulatory Cooperation? (Report). Dublin.
- ^ a b Dominioni, Goran; Englert, Dominik (2022-04-01). Carbon Revenues From International Shipping. World Bank. doi:10.1596/37240.
- ^ "Macron opens climate summit in Paris, calls for 'finance shock'". Al Jazeera. Retrieved 2024-09-10.
- ^ Dominioni, Goran (2023). "Towards an equitable transition in the decarbonization of international maritime transport: Exemptions or carbon revenues?". Marine Policy. 154: 105669. Bibcode:2023MarPo.15405669D. doi:10.1016/j.marpol.2023.105669.