Leaked text raises prospect of carbon levy on ships and planes

Some form of carbon levy on international shipping and aviation looks increasingly likely after a controversial leaked document from the Copenhagen Summit revealed that key industrialised nations would support the idea.

The so-called Danish Text, leaked yesterday to the Guardian, has enraged many developing nations for appearing to undermine both the existing Kyoto Protocol and on-going UN negotiations.

However, the draft document also contains a number of proposals that are likely to secure support from developing countries, including plans to impose a levy on aviation and shipping to help fund climate change adaptation and mitigation efforts in poorer nations.

The document states that "parties commit to global financing contributions from international aviation and international maritime transport".

It does not specify whether these contributions should be raised through a carbon tax or an international cap-and-trade scheme, but says that these contributions should be generated through mechanisms devised and managed by the UN-backed International Civil Aviation Organization (ICAO) and International Maritime Organisation (IMO).

It also states that the funds raised should be diverted into a Climate Fund that will primarily be used to invest in climate adaptation projects, and signals that the instruments devised should take into account "the principle of common but differentiated responsibility" – suggesting that aviation and shipping in the developing world may potentially have to pay less into the fund.

With many developing nations broadly in favour of some form of levy on shipping and aviation, support for the idea from the rich nations behind the Danish Text, believed to include Denmark, the UK and the US, significantly increases the chances of it being included in any final deal.

The most likely outcome is thought to be two new international cap-and-trade schemes for shipping and aviation. Some developing countries are in favour of a simpler carbon tax on all journeys, but both industries are expected to fiercely resist any form of new tax, while in contrast some of the world's largest aviation and shipping firms have signalled they would support an emissions trading scheme as long as it was global in reach.

Any new scheme is also likely to be underpinned by binding emission targets for both industries. The Danish Text does not contain any detailed targets, but it states that emission reduction targets for 2020 should be included.

A levy on shipping and aviation emissions could have far-reaching implications, driving up the cost of air travel and imports, while providing a major boost to greener business models and technologies such as localised supply chains, high speed rail and videoconferencing.

However, a spokesman for the International Air Transport Association (IATA) told BusinessGreen.com that any "adaptation levy imposed on the aviation sector would be counterproductive" as it would damage trade and tourism and undermine the industry's ability to invest in more efficient technologies.

"Our position on levies and taxes is clear," he added. Our primary focus in the climate change debate is reducing emissions - not raising taxes… If governments introduce new policies to raise adaptation funds, such policies must be applied globally across the board to all economic sectors. We are strongly opposed to any one sector being singled out to fund adaptation measures."

The IATA has proposed a voluntary target to cut emissions from the sector by 50 per cent by 2050 and ensure that emissions peak from 2020.

In addition to plans to curb emissions from shipping and aviation, the Danish Text sets out rich nations' desire to reform and extend the global carbon market, improve forest protection and increase investment in clean technologies.

In particular, it contains a pledge to dramatically increase industrialised nations investment in low carbon technologies, stating that "developed country parties commit to work towards doubling aggregate public investments in climate related research, development and demonstration by 2015 from current levels and quadrupling the efforts by 2020".