At crunch talks in London, Latin American nations led by Brazil have fought against a tax on the emissions of the global shipping sector.
The media is not allowed to watch the talks, hosted by the United Nation’s shipping arm in London, but six sources in the room said Latin American countries were most vocal against the measure.
A Brazilian foreign ministry spokesperson told Climate Home they opposed the levy, claiming it would distort trade, could push up the price of food and harm developing countries.
Germany-sized emissions
Global shipping produces about 3% of the world’s emissions, a similar amount to Germany, and the emissions from burning its fuel are currently only untaxed.
Pacific nations like the Marshall Islands and Solomon Islands, which are extremely vulnerable to climate change, have led the push for nations to agree to a tax, also known as a levy, on emissions.
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They want that price to start at $100 per tonne of greenhouse gas produced from burning ships’ fuel, which they say would raise $60-80bn a year. This amount would decline as shipping cleans up.
With journalists banned from the venue, the Marshall Islands lead shipping talks negotiator Albon Ishoda, spoke to Climate Home in the lobby of the International Maritime Organisation.
He said that shipping has a “dirty past” and has “a responsibility, as the servant of global trade to transition and to ensure a 1.5C future”.
Governments now have until July 7 to decide whether to tax emissions from the shipping sector, which are not included in the UN climate change talks.
Discomfort
Ishoda from the Marshall Islands said that a levy causes “discomfort” among many states. There has been a lot of “misinformation guided by disinformation” and developing countries think a levy will hurt them disproportionately more, he said.
“Fair enough, we’re not saying a levy will be great all round”, he said, but the $60-80 billion a year their proposal will raise could be used to decarbonise shipping and to address any negative economic effects.
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As the talks are secret, Ishoda would not disclose who opposed the tax.
But six sources present told Climate Home that Brazil had led the resistance, joined by Argentina, Chile, Uruguay, Guatemala, Ecuador, China and South Africa
At a summit in Paris last week, none of these countries signed a statement in support of the levy.
On the other side, sources said, several European nations and Vietnam spoke in support of a levy while the US, UK, India and others neither supported nor opposed it.
“Unpredictable consequences”
A spokesperson for Brazil’s foreign ministry told Climate Home by email that they oppose a levy as it “would pose greater risks than other measures, especially for developing countries”.
They said a University of Sao Paulo study had shown that developing countries that export low value-added products to far away places are “likely to be negatively affected” by the measure.
Brazil’s main exports are iron ore, soybeans, crude petroleum and sugar. The countries which take the most of its exports are China and the USA.
The study suggests that a levy would decrease exports across the world, boost some economies mainly in developed countries and harm others mainly in developing countries, particularly in Africa.
Impacts on GDP in % – red is a hit of more than 1% while blue is a gain (Photo credit: Pereda et al)
The Brazilian foreign ministry spokesperson continued to say that the levy “could have unpredictable consequences” like changes to contracts and the substitution of agricultural crops and could increase food prices “with harmful effects for the poorest populations”.
Supporters of the $100 a tonne levy point out that the price of shipping fuel swings drastically over time. Over the last few years, it has varied from $200 a tonne to $600 a tonne, largely depending on the price of oil.
While Ishoda said the levy’s revenues could compensate for any negative effects, the Brazilian foreign ministry spokesperson said that this money was a problem too.
They said that governments could come to rely on these revenues and then have to find substitute sources of income as the shipping sector decarbonises and the money stops coming in.
Not a climate finance fix
Over the last year, the idea of a tax on shipping emissions has shot from obscurity onto the agenda of some of the world’s most powerful people.
Hosting a summit in Paris of nearly 40 heads of state last week, French president Emmanuel Macron said he was “in favor of an international taxation” to finance climate action and later mentioned a tax on maritime transport as an option. US treasury sectretary Janet Yellen said at the summit that it was “something the United States will look at”.
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Ishoda said he was at the Paris summit too. But “my message was simply to inform them – this money is not to fill in the gap where you failed”, he said.
The Brazilian foreign ministry spokesperson said they were also concerned that the levy “may have the effect of partly releasing developed countries of their [climate finance] commitments”.
The levy “introduces a debate on climate financing that should not be undertook at the IMO”, the spokesperson added.
Rich nations have failed to provide the developing world with the level of climate finance they promised, a failure large developing countries often hold up as a reason they can’t cut emissions faster.
Over this week and next, governments will decide whether to include a levy on shipping emissions in their list of potential measures to reduce shipping’s emissions.
The level of the levy and what the money will be user for will be decided at future meetings.
This article was updated on 30 June 2023 to include the Brazilian foreign ministry’s comments, to add China to the list of countries opposing the tax and to correct the proposal from $100 a tonne of fuel to $100 a tonne of greenhouse gas (carbon dioxide equivalent) produced by burning the fuel.