The Singapore Shipping Association (SSA) is favouring the establishment of a greenhouse gas (GHG) compensation fund through taxation on bunker usage over emissions trading as a means of reducing GHG emissions from ships. SSA president S. S. Teo told a media briefing today that a bunker levy scheme would be “more fair, practical, easier to implement and is likely to be more transparent” than proposed emissions trading schemes.
Several other SSA council members present highlighted that there are many uncertainties in the 'cap-and-trade' mechanisms proposed so far to reduce shipping's carbon dioxide (CO2) emissions which make them more complicated than a simple 'climate levy' on bunkers.
There were suggestions that an emissions trading scheme (ETS) would basically allow operators with 'deeper pockets' to buy more credits or permits to allow them to emit more CO2 into the atmosphere.
Smaller operators might have to fold if the ETS is manipulated to their disadvantage, said SSA's technical committee chairman Goh Teik Poh.
SSA international committee chairman Kenichi Kuroya highlighted that it is still unclear how trading of credits under the ETS would be carried out, and that a non-universal ratification by the different flag states would give rise to the possibility of carriers switching registries to bypass International Maritime Organization (IMO) directives.
And an ETS would not directly address the main aim of a significant reduction in shipping's GHG emissions the way a GHG Compensation Fund by way of a bunker levy would, SSA secretary and IMO committee chairman Patrick Phoon said.
“This Compensation Fund for the shipping industry, when adopted under the auspices of the IMO should be universally applied across the board to enable a level playing field for all industry players,” said SSA president Teo.
“The funding mechanism should be transparent, rigorous, enforceable and deliver measurable reductions,” he added.
The SSA emphasized however, that the GHG Compensation Fund, if adopted by the IMO, should have provisions enacted that recognize and reward progressive operators who develop or deploy environmentally friendly technology for their ships, as well as provisions to incentivise the development of innovative green technologies.
This is in line with the Japanese government's support for a climate change levy on bunker fuel. Shinichiro Otsubo, a senior delegate in Japan's delegation to the IMO had said that Japan wanted to encourage the shipping industry to invest in efficient ships.
He was quoted saying that any incentives “to invest in highly efficient ships” should be strengthened.
Supporters of a levy have said it will encourage ship operators to burn less fuel, limiting emissions of CO2.
SSA secretary Phoon added that he “has a feeling” that the Maritime and Port Authority of Singapore (MPA), which has up to date not made its stand on these issues clear, is “skewed towards the Japanese government's proposals.”
The IMO is currently striving to formulate a global regime for controlling GHG emissions from shipping, ahead of the United Nations Framework Convention on Climate Change (UNFCCC) meeting that will take place in Denmark toward the end of this year.
The UN-body is working on a number of technical and operational measures. These are due to be discussed at the Marine Environment Protection Committee (MEPC) 59 meeting in July.
The MEPC is expected to discuss market-based instruments such as a 'climate levy' on bunker fuel and emission trading schemes.
Several other SSA council members present highlighted that there are many uncertainties in the 'cap-and-trade' mechanisms proposed so far to reduce shipping's carbon dioxide (CO2) emissions which make them more complicated than a simple 'climate levy' on bunkers.
There were suggestions that an emissions trading scheme (ETS) would basically allow operators with 'deeper pockets' to buy more credits or permits to allow them to emit more CO2 into the atmosphere.
Smaller operators might have to fold if the ETS is manipulated to their disadvantage, said SSA's technical committee chairman Goh Teik Poh.
SSA international committee chairman Kenichi Kuroya highlighted that it is still unclear how trading of credits under the ETS would be carried out, and that a non-universal ratification by the different flag states would give rise to the possibility of carriers switching registries to bypass International Maritime Organization (IMO) directives.
And an ETS would not directly address the main aim of a significant reduction in shipping's GHG emissions the way a GHG Compensation Fund by way of a bunker levy would, SSA secretary and IMO committee chairman Patrick Phoon said.
“This Compensation Fund for the shipping industry, when adopted under the auspices of the IMO should be universally applied across the board to enable a level playing field for all industry players,” said SSA president Teo.
“The funding mechanism should be transparent, rigorous, enforceable and deliver measurable reductions,” he added.
The SSA emphasized however, that the GHG Compensation Fund, if adopted by the IMO, should have provisions enacted that recognize and reward progressive operators who develop or deploy environmentally friendly technology for their ships, as well as provisions to incentivise the development of innovative green technologies.
This is in line with the Japanese government's support for a climate change levy on bunker fuel. Shinichiro Otsubo, a senior delegate in Japan's delegation to the IMO had said that Japan wanted to encourage the shipping industry to invest in efficient ships.
He was quoted saying that any incentives “to invest in highly efficient ships” should be strengthened.
Supporters of a levy have said it will encourage ship operators to burn less fuel, limiting emissions of CO2.
SSA secretary Phoon added that he “has a feeling” that the Maritime and Port Authority of Singapore (MPA), which has up to date not made its stand on these issues clear, is “skewed towards the Japanese government's proposals.”
The IMO is currently striving to formulate a global regime for controlling GHG emissions from shipping, ahead of the United Nations Framework Convention on Climate Change (UNFCCC) meeting that will take place in Denmark toward the end of this year.
The UN-body is working on a number of technical and operational measures. These are due to be discussed at the Marine Environment Protection Committee (MEPC) 59 meeting in July.
The MEPC is expected to discuss market-based instruments such as a 'climate levy' on bunker fuel and emission trading schemes.