Climate-vulnerable island states say they are being trapped “between a rock and a hard place” by the European Union – led by the Netherlands and Denmark – after the bloc engaged in discussions on a proposal to clean up the global shipping industry that islands regard as ineffective and unjust.
On the sidelines of Singapore Maritime Week on Wednesday, representatives of the European Commission, Denmark and the Netherlands met with officials from China, Japan and Singapore. According to official notes from the meeting, seen by Climate Home, they talked about an emissions trading proposal known as “J9”, which was put on the table by Singapore at the International Maritime Organization (IMO) in February during negotiations on a new pioneering system to tax pollution.
The J9 idea is an alternative to taxing all of a ship’s emissions as favoured initially by small island states and now supported by shipping-reliant nations like Panama and Liberia as well as the UK, Nigeria, Kenya and others. Some big emerging economies like Brazil and China have opposed a full levy, as they fear it will drive up shipping costs and put them at a disadvantage.
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Analysis by University College London says the J9 proposal will raise much less money for climate action and will promote short-term solutions like gas and biofuels, rather than zero-emission fuels based on green hydrogen.
Preparing to compromise
A full levy on a ship’s emissions remains the European Union’s preferred option – but IMO watchers say the bloc’s willingness to discuss details of the alternative proposal suggests it is preparing to accept it at crunch talks taking place over the next two weeks in London.
A Pacific negotiator familiar with the talks told Climate Home that the EU “have signalled quite confidently that they will take a compromise that will cede grounds to a levy”. “Once again, Europeans have locked the islands and many in the developing world between a rock and a hard place,” they added.
But a spokesperson for the Danish Maritime Authority said that Denmark and the EU still “clearly prefer a global greenhouse gas levy as part of the regulation”.
The talks in Singapore “were part of an informal dialogue with all IMO member states, including Pacific Island countries”, they noted, adding “the purpose was to explore the possibilities of reaching consensus at the IMO in case that neither the levy nor the Chinese-Brazilian proposed fuel standard would be acceptable in the final negotiations.”
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The Pacific negotiator said the J9 proposal “will not deliver” the emissions reductions governments agreed to aim for two years ago, including to reach net zero in the industry “close to 2050”.
The J9 proposal will raise some money for climate action by allowing shipowners who pollute more than they should to make up for it by buying “remedial units”, paying into the IMO’s net zero fund. But they will also be able to cancel out their excess emissions by buying credits from ships that have polluted below their limit – with the money going to the shipowners.
Not enough money raised
UCL researchers predict this system would raise just 5-25% of even a weak version of the carbon levy system the Pacific islands and others want. A full levy could raise tens of billions of dollars a year to invest in climate action and address the negative impacts of the green fuel measures on less-developed economies.
The head of an African environmental think-tank, who wanted to remain anonymous, told Climate Home that the J9 proposal “is not a desirable alternative for developing countries in Africa and would not provide the needed answer to raise climate finance”. Kenya’s climate envoy Ali Mohamed wrote in a recent article that the levy proposal would channel “vital funds” and be a “a precedent-setting move”.
The UCL analysis found that J9 would encourage investment in biofuels and fossil gas to power ships, leaving “no to little resources” to reward early adopters of zero-emission fuels based on green hydrogen like methanol and ammonia.
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The authors say this is because the J9 proposal would not provide certainty and clarity on the competitiveness of different clean fuel options, creating an incentive for shipowners to pursue short-term lower-emitting solutions rather than long-term fixes like zero emission fuels.
Last week’s talks at Singapore Maritime Week were informal. Official talks will begin at the IMO’s London headquarters on Monday. After a week behind closed doors, discussions will be opened up to the media for a week on April 7. By the end of that week, negotiators hope to have reached agreement on green measures that can be signed off at the IMO’s next environmental meeting in October.
The Pacific negotiator said small island nations are appealing for EU member states that are “far more progressive” than the Netherlands and Denmark to intervene. The Dutch ministry of infrastructure and water did not immediately respond to requests for comment.
