World Shipping Council suggests bunker levy in the race to decarbonisation

3 mins read  Sealuminati TeamMay 10, 2021

The world shipping council (WSC) on 7th of May released a statement supporting IMRB'S proposal to levy two separate taxes namely a bunker levy and a carbon tax later in the future to pace up the research towards decarbonization of the shipping industry.

Many industry bodies along with the world shipping Council (WSC) want discussions over measures taken to fund research towards decarbonization of the maritime industry at a broader level. They want the proposal of bunker levy and a carbon tax to be simultaneously addressed at the Marine environment protection committee (MEPC) meet this year, a body under the international maritime organization (IMO).

The International Maritime Research and Development Board (IMRB) earlier proposed charging fleets across the world a small bunker levy at a minimal rate of $2 per metric tonne of bunker fuel. The IMRB is currently constituted by 10 members nations of IMO and eight industry associations.

John Butler, CEO of the world shipping council justified the bunker levy by stating that it is a clear logic for the development of a viable solution to the problem of such magnitude in a short period requires intense research and experimentation of a large number of potential solutions simultaneously which requires capital and bunker levy is a measure to generate this capital.

According to IMRB's report at the current consumption rate of bunker fuel is about 229 million metric tonnes per year and if bunker levy is collected at the rate of $2/mt as suggested a fund of $458 million per year could be collected to aid the research for viable solutions to decarbonize the shipping industry.

The reason behind strong support for a bunker levy before implementation of a carbon tax is it's the immediate and direct generation of capital as any form of bunker fuel usage is going to cause some or other form of carbon emission therefore collection of levy beforehand is a direct and simple way to source the capital for research.

Industry groups still believe that bunker levy may provide short-term relief but a stringent implementation of the carbon tax system is going to be a long-term method to generate investment capital towards research for the decarbonization of the maritime industry.

The race for decarbonization of maritime industry is a long one and certainly an expensive one and to make ends meet such charges in the form of bunker levy and the carbon tax will have to be levied to fund the research to test the viability of such a large number of solutions to ultimately achieve the goal of the carbon-free maritime industry.