x Abu Dhabi, UAEMonday 24 July 2017

Taxing shippers no solution to dirty vessels

Europe's emission trading scheme, so controversial in aviation, should not be extended to cover shipping

European Union officials are talking boldly about extending their emissions-trading system (ETS) to include the world's maritime shipping industry. Considering the turbulence the EU's ETS has encountered in the aviation sector, this new trial balloon suggests bureaucratic zeal has exceeded common sense.

To be sure, global climate change is a grave problem, demanding unprecedented worldwide cooperation towards solutions. But "cap and trade" emission-trading schemes remain very far from being a proven solution. And the EU's attempt to dictate to the world's aviation industry has caused more discord than cooperation.

The UAE's airlines, after resisting the European scheme, have complied - and passed costs on to passengers. But China has slowed down talks on the purchase of new Airbus planes, and has even mentioned impounding European aircraft. The US Senate has just voted against the EU aviation scheme. "Airbus ministers" from the UK, France, Spain and Germany are trying to slow down application of the ETS to China.

Indeed the whole European ETS, not just the aviation segment, is in trouble on several fronts. The market value of emission credits has collapsed. Frauds and computer scams have cost millions. The EU now allows member states to pay "carbon compensation" to big emitters, offsetting up to 85 per cent of ETS-related costs. Those costs - one bank's research says €210 billion (Dh998bn) so far - are ultimately paid by consumers, an unwelcome burden in hard times. And as in most ETS schemes everywhere, verification and enforcement are mostly rumour; those details, officials say blandly, will come later.

And yet the EU is now threatening to overrule the slow progress of the UN's International Maritime Organisation (IMO) in controlling ships' emissions of greenhouse gases. This will increase the cost of everything shipped to or from Europe and be a brake on global trade in general.

True, some government delegations to the IMO are dragging their feet, under the influence of shipowners reluctant to invest in more efficient vessels. The current global shipping glut places no premium on new technology, even though all owners want to limit fuel costs. The IMO's new mandatory design-efficiency rules should help.

Globalisation has greatly increased cargo shipping and air travel alike. Both these industries emit greenhouse gases. Everyone wants more efficiency. Regulatory and other measures offer some hope, but emission trading schemes - ponderous, political and easily abused - do not.