The Vine

Momentum Grows For A Shipping Tax--But Will It Work?

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Here's one of the slightly-under-the-radar stories at Copenhagen: The Wall Street Journal has a piece about how any eventual climate agreement will likely include a modest tax on "bunker fuel," the low-grade oil that ships use for fuel. Much like airlines, the shipping industry was exempt from the original Kyoto Protocol, but since shipping now accounts for 3 percent to 5 percent of the world's carbon emissions, that won't last. What's fascinating, though, is that just the threat of a tax is already spurring innovation among shipping companies:

Japan's NYK Line says it will cut carbon-dioxide emissions by 70% by 2030 and develop a zero-emissions ship by 2050. The ship would use a combination of fuel cells and solar and wind energy, company executives say.

Elsewhere, the Christophe Colomb is making its maiden call to Rotterdam Friday. The 350-meter-long container ship has an electronic engine and a new type of rubberized propeller to make propulsion more efficient, said a spokesman for the ship's owner, France's CMA-CGM SA.

German company SkySails Gmbh has pioneered the use of sails on commercial freighters. The Hamburg-based firm says fuel consumption can be cut by 50% in optimal wind conditions. The company has outfitted a few small European cargo and fishing vessels with its sail system, and it's working on building sails for larger ships.

Maersk rejects sails, nuclear-powered engines and other innovations as gimmicks, Mr. Andersen says. Instead, Maersk will reach its target of cutting emissions with measures such as steaming slower and scheduling better to avoid idling, he says. The company also has adopted a few technological innovations, such as using slicker paint on hulls.

Though, mind you, one place we also may see innovation is in tax avoidance, especially since bunker-fuel vendors tend to operate in shadowy, unregulated parts of the world. In any case, according to the Telegraph, climate negotiators are edging closer to a bunker-fuel tax (as well as some sort of tax on aviation), with the idea that the money would go toward a "climate aid" fund for developing countries.

P.S. That's not to say a bunker tax is a sure thing. Dan Lashof reports that a handful of industrialized countries, most notably the United States but also shipping-dependent Singapore, have opposed the idea thus far.

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