Emissions trading for shipping sector

A report outlining solutions for reducing CO2 emissions through emission trading has been launched by the shipping associations of Australia, Belgium, Norway, Sweden and the UK.

The paper, entitled ‘A Global Cap-and-Trade System to Reduce Carbon Emissions from International Shipping’, highlights how a global and open emissions-trading system for the shipping industry can work in practical terms.

It claims that a ‘cap-and-trade’ system will be the only way to guarantee an overall reduction in CO2 emissions from shipping. This will work by allowing an organisation that emits CO2 to either buy, or be given, a certain number of carbon allowances during the compliance period to cover its emissions.

If the company then exceeds the amount covered by its allowances it will have to buy more from the market and if allowances are left over they can be saved for future use.

The authors of the report believe that this will force operators to pay more attention to efficient planning and management of their fleets and investment in modern tonnage while lowering emissions and supporting innovation and technological development.

Jesper Kjaedegaard, president of the UK Chamber of Shipping, said: ‘It is important that legislators and regulators find a practical way of including shipping in the international work to reduce global warming. In the debates so far, no option has been defined whereby shipping could fit in with the emissions-trading arrangements that are set to be applied to all other sectors. This discussion paper seeks to correct that omission.’

He added: ‘Shipping is, by a considerable margin, the most efficient way to transport goods, but it still produces about three per cent of the CO2 emitted as a result of human activity. Clearly such a major industry, transporting more than 80 per cent of world trade, has a responsibility to reduce carbon outputs. We believe some form of emissions-trading system is the way to do it.’

The associations are now working with governments to highlight the benefits of this approach ahead of the UN-led Copenhagen negotiations on reducing CO2 emissions in December.