IMF Pushes for Global Carbon Tax to Tackle Emissions from "Underpriced" Bunker Fuel

The IMF says carbon taxes for the global shipping industry will help reduce global greenhouse gas emissions.

The International Monetary Fund (IMF) has called for shipping, along with aviation, to be subject to a global carbon tax scheme, saying "substantial amounts" could be raised from charges on both bunkers and aviation fuels.

"These fuels are a growing source of emissions, are underpriced, and charges would exploit a tax base not naturally belonging to national governments," IMF said in a staff discussion note titled "After Paris: Fiscal, Macroeconomic, and Financial Implications of Climate Change."

IMF calculates that a charge of $30 per tonne of CO2 applied to both shipping and aviation in advanced economies could have raised about $25 billion in 2014.

"National governments have a weaker claim on these tax bases than they do for domestic fuels, making them appealing as a possible source of climate finance," it said.

"There are challenges, including the need for international coordination (especially important for maritime, given the mobility of the tax base) and legal issues (especially for aviation, due to treaties and bilateral air service agreements limiting fuel taxes) but the practicalities should be manageable."

As Ship & Bunker previously reported, even though the COP21 climate deal reached in Paris in December did not have any specific mention of shipping or aviation in the final text, the International Maritime Organization (IMO) nevertheless said that it was now "full speed ahead with climate-change measures."

IMF said there is a "need to recognize and exploit the potential role of fiscal policies" in implementing the COP21 mitigation pledges.

In December, the International Maritime Organization (IMO) welcomed the climate deal that was reached at the COP21 talks in Paris, saying it is now "full speed ahead with climate-change measures."