Shipping is crucial to global trade and important in the global fight against climate change – will a carbon tax on shipping be smooth sailing?

The shipping industry has so far been slow to act on climate change. Shipping is critical to world trade carrying up to 90% of commercial goods. However, the carbon heavy fuels used to power ships' engines mean it is also highly polluting.

The industry is estimated the be responsible for 3% of global carbon emissions – roughly the same amount of carbon consumed each year in Germany. Official data from Copernicus, the European earth monitoring system, showed that global temperatures soared 0.53C above the 1991-2020 long-term average last month, making it the warmest June on record.

Unofficial data shows that this pattern has persisted into July, with three days last week breaking records for highest daily temperature.

The Eemian epoch was the last time temperatures were this high. Temperatures were 1–2 degrees Celsius higher during the Eemian period, which occurred between 130,000 and 115,000 years ago and was the final interglacial phase.

So it is challenging to include vessels that circle around the globe into an architecture for reducing emissions that depend on individual governments and supra-national institutions like the European Union subscribing to agreed-upon objectives.

Ships emit around one billion tonnes of CO2 every year. Without further action, shipping emissions are forecasted to reach 90-130% of their 2008 levels by 2050. However, there are currently no viable replacements for the extremely polluting conventional fuels that are now in use.

In order to better align with global efforts to keep warming at 1.5 degrees Celsius over pre-industrial levels, the industry is ready to make a long-overdue promise. In spite of what may be an essential step towards achieving the industry's new targets—a global tax on shipping emissions—China has galvanised poorer nations against the idea.

Previously, the International Maritime Organisation (IMO), which regulates shipping, only committed to halving greenhouse gas emissions from 2008 levels by 2050. After a week of behind-closed-doors discussions, a crucial IMO committee finalised a comprehensive agreement on net zero emissions by 2050 .

However, a strategy for accomplishing this goal has to be created.

The usage of zero-carbon fuels, such those in cars, must be mandated as part of the solution. Carbon pricing also has to be a top priority.

A global strategy would be more comprehensive and wider-ranging than the EU's current plans to incorporate shipping in its emissions trading system, which will oblige shipowners operating in European waterways to pay a financial penalty for their pollution.

Shipping companies would be more likely to invest in ships powered by renewable energy if they were required to pay a fee. Given that a ship's working life might be anywhere from 20 to 30 years, the changeover is urgent. The transformation of maritime and port infrastructure, as well as the development of alternative fuel technologies like green hydrogen or ammonia, may also be greatly aided by a tax.

A tax on global shipping may generate $40 billion to $60 billion year between 2025 and 2050, according to 世界银行 estimate from last month. It was suggested that part of these funds go to developing countries to assist in their green transition rather than only being reinvested in maritime transportation. Financial compensation for "loss and damage" sustained by vulnerable nations as a result of climate change has been proposed by several governments.

Diplomats were disappointed by French President Emmanuel Macron's efforts to rally conference attendees in Paris around a tax at a meeting last month.

China has warned developing countries that a flat tax and further decarbonisation pledges will slow economic growth by raising prices in the global supply chain. It is not alone in this worry; Brazil and Argentina share similar concerns about the impact of a charge on their export prices. It would take at least a few years to create a levy, but the cash may aid governments in their efforts to decarbonise the maritime industry.

Long-term climate costs would be greater if emissions were not reduced. The Marshall Islands, home to one of the world's largest ship registries, is only one example of the many economically depressed nations who favour a tax because of their vulnerability to rising sea levels.

China's Belt and Road Initiative provides it considerable sway in developing nations, where it has a history of disguising its own interests (it has a massive state-owned marine enterprise) as concern for other countries. However, many who attended last week's IMO sessions observed a stark geopolitical gap between wealthy and developing nations.

The wealthier countries that favour taxing emissions from ships should do more to back their position. The proposal may assure a smooth transition for all parties involved and provide significant cash to modernise shipping.

In a really global business that has been resistant to decarbonisation efforts thus far, this might be a game-changer.

A report by the Dutch consultancy CE Delft found that emissions in international shipping could be reduced by 28-47% by 2030 if ships take all possible technical abatement measures available, including the maximal deployment of wind-assisted technology, reduce their speed by 20-30% and use 5-10% zero-GHG fuels.

It is forecast that such a reduction would increase shipping costs by 6-14% on average, relative to business as usual.

Island nations like the UK and Singapore are particularly reliant on their maritime industries – approximately?95%?of all UK imports and exports by volume are moved by the sea.

While the impact of a tax on shipping would be noticeable to most people it will be particularly pertinent to island nations as well as major economies like the United States the largest goods importer in the world.

How do you think a tax on shipping will affect global trade and global carbon emissions?

Would it help ecological buying local campaigns?

I’d be interested to hear your thoughts.