With global carbon levy being a looming uncertainty, shipowners remain cautious

Uncertainty about the scale and nature of the International Maritime Organization’s proposed carbon levy is holding back investment in shipping, according to Christopher J. Wiernicki, Chairman and CEO of the US-based class society ABS.

Wiernicki touched upon the topic of the carbon levy at a recent energy conference in Houston, Texas.

“A carbon levy is a wild card. It will all depend on how it is implemented and enforced. There’s a huge question mark over whether this will deliver for the industry and there is much still to be decided,” ABS CEO explained.

“Will the levy be set at $18, $100 or even $150 per ton? Today, we just don’t know but this clearly has a significant bearing on a host of factors: operational, investment and asset viability. With the lack of a clear global carbon pricing mechanism, it is no wonder owners are cautious and concerned given the high degree of uncertainty this introduces into the market,” he added.

Wiernicki said shipowners are responding with the available tools and that carbon capture was beginning to mature.

“The industry is balancing short-term efficiency measures with long-term fuel readiness. Investments in digital optimization, wind-assisted technologies, and energy efficiency will play a crucial role in bridging the gap until low-carbon fuels become viable at scale. Meanwhile carbon capture and storage (CCS) is starting to gain traction, with trials onboard suggesting that it could allow continued use of fossil fuels in a net zero scenario.”

In related news, the adoption of the global carbon levy still seems to be a long way off as the measure attracted supporters but also opponents at a recent IMO climate talks in London.

Namely, Dominica, Georgia, Grenada, Kiribati, Malawi, Mexico, Namibia, Nauru, New Zealand, Senegal, Switzerland, Trinidad and Tobago, and Türkiye supported the levy, agreeing it should be in the price range of $18-150/tonne of greenhouse gas.

On the other hand, Brazil, Angola, Chile, China, Colombia, Ecuador, Indonesia, Paraguay, Peru, the Kingdom of Saudi Arabia, South Africa and Uruguay opposed the global carbon levy. They believe that the proposed measure could endanger exports from developing countries, raise food prices, and increase inequalities among and within countries.

• 47 governments, shipping industry propose text for IMO carbon tax
• ICS: Global GHG levy is the way forward for shipping’s net-zero aspirations