Trafigura proposes carbon tax to IMO

Carbon Levy Photo shutterstock
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According to WMN, Trafigura, one of the world’s largest ship charterers, has proposed that the International Maritime Organization (IMO) introduce a carbon tax to help boost competitiveness and the adoption of alternative fuels.

The company proposes a levy of between $ 250 and $ 300 per metric ton of CO2 equivalent in transportation fuels. The system would be overseen by IMO and would be adjusted as the competitiveness gap narrowed.

“We believe that only by introducing a significant tax on carbon-intensive fuels can sufficient progress be made towards the decarbonization of the global shipping industry,” the company said.

Trafigura believes that the revenue raised from this tax could be used in part to fund more research and development for alternative fuels.

A portion of the proceeds should be used to help developing countries manage energy transition processes and help them mitigate the consequences of climate change.

“We recognize that a carbon tax will have an immediate effect on the shipping costs that companies, including ours, would bear. This increase in operating costs will stimulate charterers to change their behavior to reduce emissions, charter more efficient vessels and switch to lower carbon fuels, ”said Trafigura.

The proposal coincides with mounting pressure on the IMO to introduce a market-based measure that helps save the huge investment required to make the switch to alternative fuels to decarbonize shipping.

The momentum for the international community to act on this measure ahead of the EU is building as Europe appears to be losing patience with IMO’s slow action and could do so on its own.

The industry agrees that a regional measure would be counterproductive and cause market distortions or even trade tensions.

The International Maritime Organization (IMO) is targeting a 40 percent decrease in GHG emissions by 2030 for international shipping and a 50% reduction by 2050 compared to 2008 levels.

To do so, the industry needs to introduce zero-emission ships by 2030 and switch to zero-emission fuels.

That said, the sector also needs to invest trillions of dollars to build a completely new fuel industry and supporting infrastructure in a couple of decades. Most importantly, the effort must make business sense for the change to be feasible and financially sound.

In December 2019, shipping associations across the maritime sector submitted a proposal to IMO for the establishment of a $ 5 billion GHG reduction research and development program.

He proposes that $ 2 per ton of fuel be collected over a ten-year period.

Discussion on the proposal has been delayed due to restrictions related to COVID-19. However, the fund will be on the agenda once IMO’s Marine Environment Protection Committee (MEPC) meets in November in a digital environment to discuss urgent matters.

Source WMN Euractiv

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