Small islands vs ‘suit boys’

The UK yesterday agreed to give up sovereignty of a group of 58 islands in the Indian Ocean, in return for a military base on one island to be used by the UK and the US. The deal ends half a decade of wrangling over the strategically important archipelago, Lucy Fisher and Joseph Cotterill reported.

Meanwhile in London, island states and emerging market exporters debated how to navigate a different kind of security concern: the shipping industry’s carbon emissions, which threaten many coastal nations with rising sea levels. But those international maritime talks were far from reaching consensus, Oliver Telling and I report.

Shipping levy fight on choppy seas

Shipping executives and country negotiators amassed in London this week to wrangle over proposals for a levy on greenhouse gas emissions from maritime trade, which remains almost entirely dependent on fossil fuels.

Officials from among the 170 member countries descended on the UN’s International Maritime Organization headquarters to discuss how to place a cost on shipping emissions, including a levy or another economic measure, and then potentially distribute the funds to those countries most affected by climate change.

A $100 levy on each tonne of shipping’s carbon emissions has been a long time priority of many small island developing states threatened by sea level rises, but other members have opposed such a high price or even the concept of a flat fee.

Attendees at this week’s meetings said that negotiations remained in a stalemate, even as some push to reach an agreement as soon as next year and to start collecting the levy by 2027.

“There are no real discussions on the actual amount, because we are not even having agreement in the room how [the economic measure] could be constructed,” Lars Robert Pedersen, from industry group Bimco, told Moral Money as he left the meetings on Thursday. “We are nowhere close to having an idea of what the final result will be.”

“There are many countries in the IMO that still have not accepted that there is a change coming,” Albon Ishoda, ambassador for the Marshall Islands, told Moral Money.

“There is so much politics that has come into what should be a technical conversation. The islands have become the adults in the room [and] need to break the chokehold [that the world’s biggest countries hold on the IMO]. It is a suit boys club,” added the ambassador, proudly wearing a patterned shirt in the colours of the Marshall Island flag.

The small island developing nations have recently won the support of several African countries for a levy, and their $100 per tonne of emissions proposal has been backed by the EU, Canada, South Korea, and Japan, one of the world’s largest ship-owning nations. They also welcomed UK Prime Minister Keir Starmer’s call at the UN General Assembly last week for “a price on the true cost of emissions through a new levy on global shipping”.

But faultlines divide the vast developing world, with major exporters such as Brazil, China and South Africa historically resisting the most progressive proposals which they fear could drive up the costs of commodity trade.

Although country negotiators have agreed to impose some form of economic cost on shipping pollution, some are pushing for a measure that would only charge ships with emissions above a certain threshold, while offering payouts as an incentive to the least polluting.

Shipowners, many of whom attend and influence IMO negotiations, are also split. Danish group AP Møller-Maersk, which has started investing in ships that could be powered by green methanol, is among those concerned about falling behind competitors unless a cost is placed on fossil fuels.

“It’s imperative that the International Maritime Organization and its member states agree on making green maritime fuels as affordable as fossil fuels,” Maersk chief executive Vincent Clerc wrote on LinkedIn ahead of the conference, echoing his remarks to the FT in an interview about the need for green incentives. 

Loggerheads over who gets the proceeds

Attendees are also at loggerheads over how the proceeds of any economic measure should be distributed. Olumide Idowu, the executive director of an African climate change non-profit based in Nigeria, attended the talks to speak in favour of a higher levy. 

African governments were often accused of lacking technical expertise to respond to crises, he told Moral Money, but more often they simply lacked the financial resources with which to do so. That’s a key reason he supports a tax that would flow to the countries most vulnerable to climate change.

Asked about middle-income exporters’ opposition to the tax, Idowu blamed “greediness”. Countries that benefited from the status quo would be slow to change, he argued.

Modelling by economists last year at the University of São Paulo found that the costs of a global maritime levy would fall most heavily on middle- and low-income countries in energy, mining, and agricultural sectors, potentially “exacerbating existing inequalities across regions”. Brazil would be of course among those most affected.

Nicole Morson, a climate activist from the tiny Caribbean state of Dominica, attended the IMO talks in London to push for a shipping levy of $150 per tonne of greenhouse gas emissions, one of the more ambitious proposals.

Small island states are pushing for revenues to flow primarily to climate resilience and the green energy transition in countries affected by global warming, and some criticised plans to channel more revenue into subsidies for shipping industry decarbonisation.

Morson, a former fashion model, said she became involved with climate activism after participating in New York Fashion Week in 2017.

She was living in Anguilla at the time, and while models strutted the runway in New York, her Anguilla home was battered by Hurricane Irma. Days later, Hurricane Maria devastated Dominica, where she lived as a child.

In London to make the case for the shipping levy, Morson argued that tax on polluters in an industry that is responsible for 3 per cent of planet-warming emissions could help support the development of a greener tourism industry, and climate adaptation measures, in the Caribbean. The push for the tax, she said, is “a movement of the climate underdogs.” (Lee Harris and Oliver Telling)

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