The liner shipping industry, through its World Shipping Council, has proposed a regime for improving ocean-going vessel emissions worldwide. It’s a good move. The WSC considered what proposals were already on the table–fuel tax and emissions trading system–and offered something different and credible.
The Vessel Efficiency System (VES) takes a cue from regulatory regimes like American CAFE standards for vehicles. Reduce fuel consumption and increase efficiency to reduce carbon emissions.
An international standard is a must for such a borderless, multinational industry. The industry knows that at least one proposal on the table has in mind using ocean shipping as a revenue source for the broader GHG reduction strategy discussed at COP15 in December. (Simply a tax on bunker also would not address enviro complaints that emission reduction is not directly addressed.) WSC doesn’t want GHG tax revenues raised on ships to stray far and so proposes “that some significant portion of the funds be dedicated” to R&D ‘targeted at increasing the energy efficiency of the world’s fleet.”
Presumably the proposal will have some support among major flag nations. Undoubtedly the proposal will be picked apart in some quarters. But then WSC President Chris Koch and environmental VP Bryan Wood-Thomas know that. Better to have your own proposal in the mix. “The Committee is invited to consider the information in this document and take action as appropriate.”
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World Shipping Council – Vessel Efficiency System (VES)
- Establish efficiency design standards or targets for new and existing vessels where calculation of an Energy Efficiency Design Index baseline is feasible,
- Establish mandatory efficiency standards applicable to new builds, with subsequent standards established through successive tiers,
- Establish different (less stringent) efficiency standards that apply to the existing fleet after a given year,
- Assess charges on fuel consumption for existing vessels failing to meet the standard for existing vessels, and
- Establish a fund populated by the revenue.
The purpose of combining vessel design efficiency with the fund concept is to:
- Produce an enhanced environmental result;
- Address criticisms that the other proposal to establish a fund through fees on bunker sales would be a commodity tax with limited impact on improving carbon efficiency across the world’s fleet;
- Provide greater incentive to vessel operators to invest in efficiency improvement; and
- Discourage the long-term operation of the most inefficient vessels.
For those ships subject to the charge…the relative cost per ton is less for those ships that miss the standard by a smaller margin. The least efficient ships of a given class and size would pay the highest charge.
Like the Danish proposal, such a system would generate funds for an IMO administered “fund;” however, this approach would also financially reward those ships that meet the specified efficiency standards and create an incentive to improve or retire the least efficient vessels within a given class and size grouping.