News / Time for shipping 'to bite the bullet' and pay for its emissions, says ICS

The International Chamber of Shipping (ICS) has revised and increased its proposal for a levy on shipping emissions, for consideration at next month’s IMO MEPC 82, by $20.

The global trade association for shipowners and operators said it was time for International Maritime Organization (IMO) member states to “bite the bullet” and adopt a maritime greenhouse gas emission (GHG) levy for entry into force in 2027.

The IMO, a UN agency responsible for regulating maritime transport, is expected to introduce some manner of carbon-pricing mechanism.

Having pitched various iterations of a fuel levy over the years, including a $20-$40 tax per tonne of conventional fuel oil consumed, the ICS will next month submit a higher proposal, of some $60 per tonne, with a corresponding $100 per tonne reward for CO2e (CO2-equivalent) prevented.

Because of the way CO2 emissions are generated – one tonne of fuel burned equals 3.114 tonnes of CO2 emitted – this would equate to a levy of $19.26 per tonne of CO2e emitted.

The proposal bears a degree of similarity to the Green Balance Mechanism proposed by liner shipping lobby the World Shipping Council (WSC) this year. In 2022, under the leadership of former CEO Soren Skou, Maersk parted ways with the ICS and joined the WSC.

A Clarksons Research impact assessment, conducted for the ICS in 2022, found that a bunker levy of as much $400 per tonne of CO2e ($1,256 per tonne of fuel oil) would add around $1,240 per teu for perishable cargo on a typical reefer trade – a fraction of the rate hikes caused by the Covid-19 pandemic or the Red Sea crisis.

“…The cost of the range of levy contributions explored, up to and including $400 per tonne of CO2, would in most trades be similar to the typical monthly variability of delivered cargo prices,” commented the assessment.

ICS secretary general Guy Platten said: “Unless a distinct GHG pricing mechanism and feebate programme are included in the IMO regulations adopted next year, we genuinely fear that shipping’s transition to net zero by or around 2050 will be unlikely to succeed.”