Shipping carbon tax costs will fall on consumers

UN proposal will result in consumers being hit in the pocket

Consumers will bear the cost of a future marine fuel tax proposed by the UN to reduce carbon emissions, as shipping companies, importers and retailers hand on the increases, say commentators.

The UN’s International Marine Organisation (IMO) has made a number of proposals to curb pollution from ships, including limiting sulphur emissions near coastal areas and a blanket marine fuel tax, known as bunkers.

The proposals will be reviewed in June and it will be at least a year before such measures come into force, according to the IMO.

A carbon index for new ships has also been proposed, which would allow shipping firms to choose environmentally friendly and therefore cheaper-to-operate designs.

The EU has suggested that shipping should fall under a global emissions trading scheme, similar to the EU’s ETS.

A scientific study commissioned by the IMO last December estimated carbon emissions from ships at 3.5 per cent of the global total, compared with two per cent from aviation. Ships carry 90 per cent of the world’s traded goods by volume and IMO says pollution from ships could increase by a third by 2020 to nearly 1.5 billion tonnes.

Experts at Dutch-based DK Group, a marine technology firm that specialises in reducing ship emissions, say the IMO has underestimated shipping growth and that carbon emissions from ships could exceed two billion tonnes in 2020.

However, a recent report in The Economist indicated that shipping volumes hit a peak in late 2007 and are likely to decline. The busiest shipping route from Asia to the US showed a five-month decline, the most protracted since 1995, according to investment bank UBS. Shipments from Europe to the US are also shrinking.

The Economist report points to a glut of shipping capacity which has forced down rates, a shortage of crews and the rising oil price pushing up running costs and increases in insurance costs.