Singapore Shipping Association roots for bunker levy

The Singapore Shipping Association (SSA) has backed the establishment of a greenhouse gas (GHG) compensation fund through taxation on bunker usage to tackle shipping’s emissions, in opposition to a widely-proposed emissions trading scheme.

S. S. Teo, President of the SSA, revealed that a bunker levy scheme would be “more fair, practical, easier to implement and is likely to be more transparent” than an emissions trading scheme (ETS).

He indicated that there are too many uncertainties in ‘cap and trade’ mechanisms, and that such a system would enable operators with ‘deeper pockets’ to buy more credits or permits to allow them to emit higher levels of CO2 into the atmosphere.

Emphasising how a simple climate levy on bunkers would prove a much simpler and fairer solution to the industry, the SSA’s Technical Committee Chairman, Goh Teik Poh, warned that smaller operators might have to fold if the ETS is manipulated to their disadvantage.

With ambiguities about how trading of credits under ETS would be implemented, the Association said that a non-universal ratification by different flag states would give rise to the possibility of carriers switching registries to bypass International Maritime Organization (IMO) directives.

Advocating a bunker levy through a GHG Compensation Fund as a more effective method of significantly reducing shipping’s GHG emissions, Mr Teo said: “This Compensation Fund for the shipping industry, when adopted under the auspices of the IMO should be universally applied across the board to enable a level playing field for all industry players.

“The funding mechanism should be transparent, rigorous, enforceable and deliver measurable reductions,” he added.

The Association also highlighted that if a GHG Compensation Fund were to be adopted by the IMO, operators who develop or deploy environmentally friendly technology for their ships should be awarded recognition and also financial provisions, to offer incentives for further development into innovative green technologies.

The IMO is currently striving to formulate a global regime for controlling GHG emissions from shipping ahead of the United Nations Framework Convention on Climate Change (UNFCCC) meeting that will take place in Denmark toward the end of this year.