Carbon tax takes centre stage

A portion of the funds collected through these taxes could form part of the Green Climate Fund, reports Sayed Talat Kamal from Durban

Sayed Talat Kamal

from Durban, South Africa

Durban, Dec 1 (bdnews24.com) - Carbon taxing seems to be the favoured, albeit still controversial, solution offered at the UN Climate Summit at Durban.

While the issue of taxing carbon emissions has been raised by major industry contributors - such as the aviation and shipping industry - which most representatives and interest groups concerned are in agreement of, there have also been suggestions to impose carbon taxes on agriculture, an area that is a bit more murky and sensitive.

A significant portion of the funds collected through these carbon taxes, which is a tax on the carbon content of fuel, or more on carbon dioxide emissions from burning fossil fuels, will be channelled into the Green Climate Fund as source of reliable revenues.

The fund, in theory, would be used to provide up to US$100 billion each year to help countries, most vulnerable to climate change, pay for programmes to adapt and reduce their own emissions. The establishment of this fund was agreed upon in the last installment of the Conference of Parties (COP16) to the UN climate change convention in Cancun, Mexico last year.

The carbon tax in aviation has both its strong proponents as well as its detractors. The EU, for example, has said yesterday that it would not back down on the levy to tax the carbon emissions on international airlines, and would impose the tax on all airlines flying into or out of European airports.

The measure has been opposed in European courts by at least two American airlines, with more challenges expected from Chinese airlines as well.

The Chinese delegation has expressed its firm opposition arguing that such a unilateral or mandatory action would constrain the growth of international aviation. Venezuela has described the proposed measure as "a bomb," and was concerned that it could "cause lots of problems at the international level."

Despite the EU's assurances that the new Emissions Trading Scheme was a "market-based mechanism" rather than a carbon tax on aviation, the root affect would be exactly the same and progressively raise costs for airlines unable to reduce their emissions.

The international aviation sector, which accounts for 2 percent of greenhouse gas emissions, has managed to sidestep mandatory curbs on its emissions, directed under the Kyoto Protocol, however, there has been renewed pressure in Durban to tighten the carbon net on all aviation emissions.

Unlike the aviation industry, however, the shipping industry does not have any targeted curbs on its carbon footprint - despite accounting for 3 percent of global emissions - a figure equivalent to the total emissions from Germany.

In fact shipping emissions are not even regulated under the global climate framework.

This is an omission that green campaigners are pushing for at COP17. The World Wildlife Fund (WWF) and Oxfam have proposed that merchant ships be subject to "market-based measures" as an incentive to reduce greenhouse gases. This would be in the form of slapping a carbon price on shipping emissions.

With emissions from international shipping projected to increase by 150 to 250 percent by 2050, the problem with carbon taxing in the shipping industry is that shipping emissions cannot be practically attributed to any individual country, therefore, the carbon price for the industry would have to be applicable universally.

It has been being suggested in a report, presented at the COP17 meetings, that the carbon price for bunker-ship fuel be pegged at US$25 per ton, which would in turn generate a revenue of at least US$25 billion each year.

The report suggests that the resulting effect on shipping costs would be a mere 0.2 percent increase, or US$2 per US$1000 traded.

Furthermore the money generated from these carbon taxes would be ploughed back into developing countries as rebates to compensate for the impact on their economies. The rebates would be calculated in line with the percentage share of their global imports by sea.

South African Deputy Transport Minister, Jeremy Cronin, has said that he supported a global tax on shipping fuel, but raised reservations, "Let's find ways for developing countries to get rebates. The debate must be opened up because if we don't do it, the EU is already moving towards an aviation fuel tax and towards a maritime tax."

While there are a few detractors against carbon pricing, notably silent because the proposals are yet to flesh out, the International Chamber of Shipping (ICS), which accounts for 80 percent of the world's merchant fleet, has said that it preferred a straightforward levy. ICS secretary general Peter Hinchliffe, in a statement, said that the rules should be crafted under the UN's International Maritime Organisation (IMO) "with the same rules applying to all internationally trading ships, but in a manner which respects the principles of the UN Climate Convention."

A carbon price, however, is likely to increase the cost of four major imports - food, fuels, minerals, and manufactured goods - for many countries.

While there are still sceptics of Climate Change, scientific data shows that 95 percent of countries suffered their warmest decade from 2001 to 2010. Scientists believe that any rise above the 2℃ threshold could trigger far-reaching and irreversible changes on Earth over land and in the seas.

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