A global carbon levy can accelerate push towards zero-emission shipping

November 2021 could prove to be a crucial month for tackling climate change. The United Nations Climate Change Conference, known as the COP26 summit, will bring together governments and other bodies from 197 countries in Glasgow to accelerate progress on meeting the goals of the 2015 Paris Agreement and move forward the UN climate change process. Like all sectors, shipping needs to play its part in combatting climate change and reduce its greenhouse gas emissions. 

The shipping industry, which transports close to 80 per cent of global trade, accounts for 2-3% of global greenhouse gas emissions, according to the International Maritime Organization (IMO). To align international shipping with the goals of the Paris Agreement, the industry must adopt a target of full decarbonisation by 2050. 

Different parties across the industry are working on solutions to reach this goal. One of the measures advocated is the imposition of a carbon levy, a tax on fossil fuels. 

Among the proponents of such a carbon tax is Christian M. Ingerslev, CEO of Maersk Tankers. “To decarbonise the industry with speed and at scale, we need to ensure there is a financial incentive for the industry. Zero-emission fuels must be financially viable. This is where we need help from regulators,” he says. “By putting a price on carbon, regulators can close the competitiveness gap between fossil and zero-emission fuels – a challenge that the market cannot solve by itself.” 

When it comes to implementing global regulation, all eyes turn to the International Maritime Organization, the shipping industry’s global governing body. Without the full regulatory support of the IMO, the early implementation of a global carbon tax is unlikely. However, the IMO’s support has not yet been secured, as achieving consensus among member state delegations takes time. 

“Unfortunately, the IMO is not acting at the speed and with the level of ambition required for us to reach the goals of the Paris Agreement,” says Ingerslev. “The uncertainty caused by this lack of regulatory progress makes it challenging for the industry to act now, as there are no commercially viable alternatives to fossil fuels for shipping.”

To accelerate progress, Ingerslev is co-chairing one of the workstreams of the Global Maritime Forum’s Getting to Zero Coalition, which looks at how policymaking can support the decarbonisation of shipping. The Getting to Zero Coalition brings together decision-makers from across the shipping value chain with key stakeholders from the energy sector, governments, and inter-governmental organisations to propel decarbonisation with the goal of developing and deploying commercially viable zero emission vessels by 2030.

In Ingerslev’s view, collaboration and partnerships across the industry are vital: “As an industry and at company level, we can point the way towards zero-emission shipping by engaging actively in innovation and regulation, which will drive progress.” 

The COP26 conference, “Shaping the Future of Shipping” on November 6th, will address the key strategic measures in shipping’s locker, such as policy and frameworks, innovation infrastructure and energy transformation financing. With the IMO’s meeting on decarbonisation taking place shortly afterwards, COP26 can lead the way. “We need governments to demonstrate the necessary political leadership – the summit can act as a push to the IMO to speed up global regulation and implement a global carbon levy”, says Ingerslev.