Shipping Emissions Trading Scheme: Potential Risks and Industry Divide
The debate surrounding a shipping emissions trading scheme has intensified as AP Møller-Maersk cautions that such a plan may inadvertently promote the continuing use of liquefied natural gas (LNG) in the maritime sector. This issue is set to be a focal point in discussions at the upcoming UN International Maritime Organization (IMO) meetings next month.
Understanding the Emissions Trading Proposal
Scheduled negotiations aim to establish a global mechanism for pricing carbon emissions in the shipping industry. This initiative comes as the sector grapples with its significant environmental impact, contributing approximately 3% of global greenhouse gas emissions while facilitating 80% of international trade.
Current proposals present a complex credit trading system, wherein ships that exceed specific emissions thresholds would be required to purchase credits from those operating with lower emissions. However, Maersk argues that these proposals do not adequately penalize the use of LNG, potentially continuing its status as the most economical option for shipowners, despite concerns about its higher CO₂ and methane emissions compared to green alternatives.
Implications of Different Supporters
The industry is divided. Major shipowning countries such as China and Brazil advocate for the credit trading scheme, while nations vulnerable to climate change, including many Pacific island states, back a simpler levy system—proposing rates as high as $100 per tonne of carbon emissions.
Europe and Japan recently expressed support for a hybrid approach, combining both a trading system and a levy, indicating a possible path forward that addresses diverse stakeholder interests.
Maersk’s Concerns
According to Maersk, under the current proposals based on the EU and Japan’s framework, a vessel that utilizes LNG could end up buying 48% fewer credits by 2035 than one that uses traditional bunker fuel, despite LNG only being 19% less polluting. This disparity raises concerns about the effectiveness of the regulations in promoting genuine sustainability.
In a presentation, Maersk stated, “It is highly likely that fossil LNG remains the cheapest option” under the proposed trading scheme, reflecting their position that the current roadmap could fail to drive significant advancements toward decarbonization within the industry.
Expert Perspectives on Regulatory Strategies
Tristan Smith, a shipping energy researcher at University College London, has echoed Maersk’s concerns, suggesting that the current scheme risks enabling a “pay-to-pollute” mentality among shipowners. He argues for a straightforward levy system combined with subsidies for greener alternatives to encourage swift competitive investments in low-carbon fuels.
In contrast, Maersk has put forth its own vision of integrating a levy with a trading system designed to compel shipowners to purchase credits proportional to their overall emissions, potentially minimizing reliance on LNG.
Conclusion: A Critical Crossroads for Maritime Emissions
As the IMO prepares for its landmark discussions, the outcome will bear significant consequences for the future of shipping regulations and climate action. Achieving consensus among a disparate group of member states may ultimately determine whether the industry embraces meaningful decarbonization or continues along its current path.