Shipping heavyweight Japan presents proposed carbon tax for industry

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Japan has told a global shipping regulator it will back a carbon tax to raise more than $50 billion a year, a big step from the world’s second-largest ship-owning nation to tackle shipping emissions.

The proposal to the International Maritime Organization is one of the most significant from a major maritime nation and comes as debate intensifies over how to decarbonize maritime trade, which generates nearly 3% of global gas emissions greenhouse gases, more than those produced by Germany.

The sector, driving global trade, is difficult to decarbonise because of its diversity, from ferries to huge tankers, and because clean fuels such as green hydrogen, ammonia or methanol are not yet widely available. scale.

Japan’s proposal suggests that industry pay $56 per ton of CO2 from 2025 to 2030, which would yield more than $50 billion a year on the nearly 1 billion tons of emissions from shipping. He also suggested increasing costs every five years, up to $135 a ton from 2030.

“We want to come up with a system that collects money from fossil fuels [powered] ships and return the money to zero-emission ships” to help eco-friendly ship operators recoup their upfront investment costs, said a Japanese maritime bureau official involved in the proposal.

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Japan is the world’s third-largest shipbuilder and Tokyo is expected to help chart a course between Western ambitions on climate change and the economic concerns of developing countries ahead of critical IMO meetings this spring.

To date, only the Marshall Islands and the Solomon Islands have offered a significant financial incentive to decarbonize shipping, at $100 per tonne of CO2. The International Chamber of Shipping, the industry lobby, is pushing for a levy equivalent to 63 cents per tonne of CO2 to create a research fund, which many member states say is distracting from deeper discussions on a carbon tax.

Developing countries want any revenue generated from a carbon tax on shipping to be used to offset them from the effects of climate change and any lost trade. The industry wants to redirect funds towards paying for decarbonization and the necessary infrastructure.

Multilateral negotiations within the IMO will try to decide what kind of financial incentives to pursue to reduce emissions from shipping, ranging from carbon trading schemes and levies to rebates for “green” ships.

China, supported by Argentina, Brazil, South Africa and the United Arab Emirates, has proposed levying a fee on vessels below a certain carbon efficiency threshold – instead of depend on the fuel they use, as proposed by Japan – and to reward ships above a certain threshold. certain threshold.

The Japanese official said the shipping industry believes that a carbon tax system “allows them to calculate how much they have to pay, so they can make a financing plan with precision.”

He said the figures given by Japan could change depending on the evolution of the costs of ammonia and hydrogen for zero-emission fuels in the coming years.

Aoife O’Leary, chief executive of Opportunity Green, an environmental action group, said the “incredibly fast” speed at which Japan was aiming for a deal – by next year for implementation in 2025 – was encouraging.

However, campaigners were disappointed that the Japanese proposal only covers emissions produced on board ships and does not cover emissions generated during the production of the fuels. This would mean that fuels produced from hydrocarbons would be treated the same as those produced from renewable energy sources.

“It would be unfair to burden developing countries with disproportionate costs to solve a global problem that they did not create,” said a Latin American delegate of the proposal.

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