New proposal on shipping emissions offers breakthrough for Durban climate change talks

New report from Oxfam and WWF shows how the proposed deal can work for rich and poor countries

A new report published today by Oxfam and WWF argues that a proposed deal to apply a carbon price to international shipping should be at the heart of the agreement at the UN climate change conference in Durban, South Africa, later this year. The report shows how it is possible to tackle the huge and growing greenhouse gas emissions from ships and raise billions of dollars to help developing countries tackle climate change, without unfairly hitting developing countries. The deal offers a solution to the deadlock on shipping emissions that has lasted more than a decade.

The report, Out of the Bunker – Time for a fair deal on shipping emissions, is published the first day of a key ministerial meeting ahead of the Durban climate conference. Agreeing further global emissions cuts and finding new sources of climate finance to help developing countries adapt to climate change are two of the biggest challenges for the Durban meeting.

Total emissions from international shipping are approximately three percent of global emissions - greater than the total emissions from Germany and around twice those of Australia. A single ship can produce more emissions in a year than many small island developing states.

According to the Oxfam/WWF proposal, applying a carbon price of $25 per ton to shipping fuel (known as bunker fuel) would help cut emissions while generating $25 billion per year by 2020. The finance would be used both to compensate developing countries for marginally higher import costs that could result from the carbon price, and to provide more than $10 billion per year to the Green Climate Fund (GCF). The GCF was established at last year’s UN climate conference in Cancun, Mexico, to channel funds for tackling climate change to developing countries but is currently empty. 

According to the report, the carbon price would only increase the costs of global trade by 0.2 percent - equivalent to just $2 for every $1000 traded. South Africa whose import costs are projected to increase by 0.14 per cent as a result, would receive compensation of approximately $200m per year, while Bangladesh whose import costs are projected to increase by 0.19 percent would receive $40m per year, in addition to any revenues received from the Green Climate Fund. Oxfam and WWF argue that this money should be spent building the resilience of the poorest and most vulnerable people in each country.

Tim Gore, Oxfam policy advisor on climate change and co-author of the report, said:

“Our research shows it is possible to cut the massive greenhouse gas emissions from shipping without unfairly hitting developing countries, and to generate billions of dollars in new cash for climate action in poor countries in the process. The costs are affordable but the benefits for the planet and those most vulnerable to climate change are huge. It's time for shipping to become part of the solution to tackling climate change, not a big part of the problem.”

Tasneem Essop, WWF Head of Climate Strategy and Advocacy said:

"The climate conference in Durban this year provides the ideal opportunity for a global agreement on shipping. A mechanism to address shipping emissions and at the same time provide financing for developing countries should be one of the pillars of a strong package of outcomes in Durban that can put the world on a path to avoiding disruptive climate change.

“This can be a concrete contribution that the South African presidency of the climate conference can make towards ensuring scaled up financing from an innovative source of funding. The detailed design of the Green Climate Fund will be decided in Durban, but if we do not identify the sources of funding we will have a bank with no money."

After more than a decade of delay, there is the impetus to strike a breakthrough agreement on shipping emissions in 2011. The World Bank and IMF are due to report to G20 finance ministers in September on options to raise climate finance, including from international shipping. France has made agreement on innovative sources of finance for development and tackling climate change a priority under their G20 presidency.

In Europe, political momentum is growing around the new proposal to ensure developing countries are compensated for the economic impacts of a global carbon price for shipping. Oxfam and WWF urge the Polish EU Presidency and countries such as the UK, Spain and the Netherlands to now get behind Germany and France to make an EU deal on shipping a top priority for Durban.

While some developed countries are pressing for a large portion of climate finance to be channelled by the private sector, Pa Ousman from Gambia, Chair of the Group of Least Developed Countries at the UN climate negotiations said: “We urgently need new sources of adaptation finance for the Green Climate Fund – taxing bunker fuels for ships and planes are one of the most promising.”