Cash raised by the shipping industry’s efforts to cut carbon emissions might be directed to developing countries to help them tackle climate change, according to a draft document seen by Reuters at United Nations climate talks on Tuesday.
The text proposes that money raised by “specific actions” to reduce emissions from maritime bunker fuels, which may be designed and implemented by the International Maritime Organization (IMO), could be directed to developing countries and used to aid climate adaptation through a Green Climate Fund.
Negotiators will discuss the proposal, which was put forward by developing countries, on Tuesday.
Several delegates at a U.N. climate summit in Durban doubted there would be agreement on it, expecting any final deal at the end of the week would be worded vaguely.
Clarity on sources of climate funding could help revive the flagging U.N. talks, which end this weekend, where nearly 200 countries are trying to make progress towards clinching a new global climate treaty.
“I don’t expect any clear outcome but if something stays in the text, it would be a big step in a small way,” said Bas Eickhout, European Member of Parliament.
“Everything boils down to where is the money? I think that the entire financial decision is going to be a big deal in Rio,” he added, referring to a U.N. conference on sustainable development in June next year.
The United Nations hopes delegates attending the talks will agree on the design of the Green Climate Fund, which aims to channel up to $100 billion a year by 2020 to countries most at risk from the effects of climate change, such as rising sea levels and temperatures and crop failure.
“It’s going to come under huge fire, especially from the U.S., who have made it absolutely clear they do not want to see any concrete source of finance in this text,” Tim Gore, policy advisor at Oxfam, told Reuters.
This is the first time a concrete source of funding has been raised in a U.N. text, but Tuesday’s draft did not define whether revenues would be raised by a levy.
Last month, campaign groups Oxfam and WWF urged a carbon price of $25 per ton should be applied to shipping fuel (known as bunker fuel) to help cut emissions and generate $25 billion a year by 2020.
They suggested the revenues raised should be used to compensate developing countries for slightly higher import costs resulting from a carbon price, and to provide more than $10 billion per year for the Green Climate Fund.
The detail of what kind of mechanism could be implemented to raise revenue was vague. The auctioning of emissions permits, jet and shipping fuel taxes and diverting fossil fuel subsidies have all been discussed in the past as possible ways to raise money in addition to public funds, which have been constrained as governments try to deal with sovereign debt in Europe and slow global economic growth.
Revenues from aviation and shipping could generate around $40 billion, according to the IMF and the World Bank.
“If it’s a levy, it could be collected directly from ships, or it could be collected from bunker fuel suppliers,” said Gore.
International shipping accounts for around 3.3 percent of the world’s man-made carbon dioxide emissions and could grow by 150 to 250 percent by 2050 if regulation is not in place.
The IMO declined to comment on the proposal. The body has made little progress in implementing market-based mechanisms to control shipping emissions, but has agreed on energy efficiency design standards for new ships to cut emissions.
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