THE PARADOX OF CARBON TAX
Ensuring a just and equitable transition toward low carbon shipping - a dry bulk shipping economics perspective
Ensuring a just and equitable energy transition in shipping is a must if it is to be truly sustainable and it takes time to get this right. Yet, time is not our friend when it comes to the environment and, paradoxically, when we account for dry bulk shipping economics, time may work against a just and equitable transition too.
TIME IS NOT OUR FRIEND Ensuring a just and equitable energy transition in shipping is a must if we want to be truly sustainable. A transition where the rich will get richer, and the poor get poorer will not work, and it takes time to get this right. Yet, time is not our friend when it comes to the environment. Missing the targets set by the Paris agreement may produce grave consequences, especially for developing countries. Understandably, the tension between the ‘E’ and the ‘S’ of ‘ESG’ (Environmental, Social, Governance) grows more evident every day.
There is a frustration that regional governments act (e.g. EU Emissions Trading System), while the International Maritime Organization (IMO) is moving at a far slower pace. One of the key elements slowing its pace is a concern about the increase in the cost of maritime transport consequential to the introduction of market-based measures, necessary to create a level playing field between green and fossil fuels. How do we ensure that it will not disproportionately affect developing countries and disturb existing trading patterns? And, how can we agree on the right way to divide and recycle the future revenues back to the system?
We must keep in mind that the IMO, a consensus-driven organization, needs to bring more than 171 countries on board. Reaching a consensus on such important issues across such a broad forum does take time. But, in balancing these important issues, assessing the cost of the time of prolonged uncertainty due to pushing back this consensus may be just as important. Paradoxically, viewed through the lens of dry bulk shipping economics, the time taken to discuss these issues may well work against a just and equitable transition.
12 | ADMISI - The Ghost In The Machine | Q3 Edition 2022
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