Carbon Market Watch Newsletter – March 2021

A global shipping pollution price on the horizon

As other industries have started paying for their pollution, the maritime sector has been let off the hook. Without urgent action, its emissions are set to rise well into the next decade. This trend goes against the Paris Agreement climate targets and the UN shipping agency’s IMO’s own initial climate strategy. After governments failed to agree on decisive short-term action last year, the discussions around a global pollution price for the sector are picking up steam again.

A global carbon price, if well designed, would help move the sector towards a climate-friendly future. It would drive behavioural change and bring revenues that can be invested in innovation, zero-carbon infrastructure and retrofitting ships among other areas. Such a scheme should include no offsets nor free pollution permits. While there should be no exemptions, those countries and people most affected by climate change, the cost of transition and the pricing scheme should receive rebates. Crucially, no global measure can be used to weaken national or regional systems, such as the EU’s carbon market which is expected to be expanded to cover international shipping soon.

A “carbon-neutral” liquified natural gas is becoming increasingly popular among big polluting companies. To clarify, this is not a new kind of non-polluting fossil fuel. The term refers to a situation where the production, transport and consumption of the gas continue – while companies buy cheap carbon credits from climate projects to “compensate” for the environmental destruction that it causes. This greenwashing is absurd and illogical and must stop.

There’s a lot of talk about the voluntary carbon markets these days and we’ve expressed our concern about their quality in terms of driving emission reductions. However, the growing hype has also brought some benefits, such as increased transparency. Findings from a new voluntary offset database are telling: the market has a huge surplus of credits, many of them very old, with a heavy reliance on questionable projects such as forestry. There are no least developed countries among those that most benefit from finance through offsets. Finally, the market is currently dominated by one single credit standard.

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