Starting price around $20-150/mt suggested for IMO's GHG pricing mechanism – UMAS

All member states reiterated that the IMO must implement some form of GHG pricing mechanism as part of its mid-term measure, University Maritime Advisory Services (UMAS) said in a report.

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Majority of member states backed a GHG pricing mechanism with a universal price, such as a levy, combined with a global GHG fuel standard, during the IMO's Intersessional Working Group on Reducing Ship GHG Emissions (ISWG-GHG 16) discussions, according to the UMAS report.

On the other hand, 14 member states suggested that the maritime regulator should adopt a credit mechanism such as an emissions trading system (ETS) as part of the GHG fuel standard, and not add a GHG pricing mechanism.

“One of the main parameters under consideration was whether the GHG price should be applied only for emissions ‘above’ the GFI limit (e.g. from an underperforming ship), or for all GHG emissions e.g. a ‘universal’ GHG price applied to all GHG emissions including all GHG emissions of ships in compliance with the GFI limit of the GFS,” the report explained.

Starting prices for GHG were proposed in the range of $20-150/mt of CO2-equivalent ($20-150/mtCO2e), the report said.

Some nations suggested a starting price of $30/mtCO2e, which would rise to $100/mtCO2e over time as emission reduction targets tighten. Some nations suggested a “flat rate” of $100//mtCO2e from the outset.

A GHG price between $20-150/mtCO2e will generate $50 billion or more in revenue annually, UMAS estimated.

27 member states recommended that the income from the pricing mechanism be directed to the maritime sector, while 10 suggested that it be divided between the maritime sector and other sectors.

The ISWG-GHG 16 meeting is the first phase of the three-phase discussion leading to the adoption of the IMO's mid-term measures. The next round of discussions is scheduled for September-October this year, with measures expected to be adopted next March.

By Konica Bhatt

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