Call for shipping polluters to pay for their emissions

August 4, 2023, 7:15 AM

DP World shipping polluters taxation — A global tax where polluters pay for their emissions would help the shipping industry reach its 2050 net-zero goals

DP World proposes global tax
International Maritime Organization targets questioned
2050 net-zero goal requires additional $400bn

UAE multinational logistics company DP World has called for a global taxation on polluters in the shipping industry to pay for their emissions.

The maritime services giant says new targets revealed by the International Maritime Organization (IMO) in July do not go far enough.

At the 80th meeting of the IMO’s Marine Environmental Protection Committee in London last month, the industry agreed to reduce shipping emissions by 20-30 percent by 2030, and by 70-80 percent by 2040.

It forms part of an overall strategy to reduce greenhouse gas emissions to net zero “by or about 2050”.

Razan Al Mubarak, UN climate change high-level champion for Cop28, which will be held in Dubai in November, said the targets “send a clear signal that shipping is part of the climate solution”.

But DP World chief operating officer of marine services Jesper Kristensen said even more must be done.

“While the strategy is a marked improvement in sending a strong signal to governments and the industry when it comes to how seriously the move towards zero emissions targets are being taken, it does not go far enough in providing the necessary clarity and commitments for a just and accountable Paris Agreement-aligned greenhouse gas transition,” Kristensen said.

He added that although the industry is fully committed to decarbonisation and is already working towards the 2050 milestone, “there is a pressing need for a global tax where polluters have to pay for their emissions”.

Kristensen said that more clarity was needed around emission standards for the individual fuels, as well as providing incentives to encourage companies to invest in greener transportation methods and solutions.

“Only by implementing such measures will we be able to unite the industry and make the move towards net zero,” said the DP World executive.

DP World’s Jesper Kristensen, left, and Razan Al Mubarak, UN climate change champion for Cop28

Reducing the impact of trade by sea

Around 80 percent of global trade by volume and over 70 percent of global trade by value are carried by sea and are handled by ports worldwide.

To reach the 2050 goal will require additional investments of approximately $400 billion over the next 20 years, making a total outlay of between $1.4-$1.9 trillion, according to the Global Maritime Forum.

Estimates from Clarkson’s Research, which provides data, intelligence and insights across all aspects of shipping and trade industry, found 44 percent of global new build tonnage ordered in the first half of this year used alternative fuel – 62 orders use methanol and 86 use liquified natural gas.

Clarksons further forecasts that shipping’s 2.3 percent share of global CO2 emissions will drop to 2.1 percent this year as a result of increasing regulations.

This includes the IMO’s introduction of key environmental ratings systems: EEXI (Energy Efficiency Ship Index) and CII (Carbon Intensity Indicator).

The European Union’s Emissions Trading System is also seen as a key policy to combat climate change.

Shefali Shokeen, oil and gas shipping consultant with Oceanlink Shipping Services Limited, said the introduction of EEXI, in particular, will impact revenues for ship owners.

“Existing ships are installing engine power limitation, which limits engine power to reduce carbon emissions,” she said.

“This reduces the ship speed and, in turn, will increase the voyage time and thereby affect the number of voyages to be done in a year.”

It is estimated that 100,000 vessels worldwide will be impacted by the energy transition.

The UAE has announced plans to establish a maritime decarbonisation centre, developed in collaboration with Norway’s DNV, one of the world’s top ship certifiers.

The centre will drive research, innovation and cooperation among key players in the industry to accelerate the adoption of sustainable practices, technologies and policies.

“Digital technologies are the best way to standardise information related to the maritime sector and develop innovative mechanisms to explore business opportunities,” said Hessa Al Malek, advisor to the minister for maritime transport affairs in the UAE Ministry of Energy and Infrastructure.