Submission 3 ISWG GHG 17-2-x Evidence 9 Aug

Executive Summary

This paper offers an evidence-based summary of the benefits from a levy/GFS combination of midterm measures as opposed to a contrary view that such a levy would be uniquely damaging and must not be included in the basket of mid-term measures. Results from CIA modelling reported by DNV and UNCTAD allows comparison of a levy with an initial $150/t CO2e price in combination with a simple GFS (no flexibility mechanism), with many alternatives, including a GFS with a flexibility mechanism but no levy. Contrary to narratives used by some countries when arguing not to include a levy, these reports evidence that the levy is a lower cost, lower impact policy solution for all countries, including developing countries, SIDS and LDCs. Consistent with wider literature, the results provide evidence that countries remote from their export markets are not uniquely adversely affected, instead it is the lowest income countries and especially SIDS and LDCs that see the greatest negative impacts from an increase in cost. This evidence shows that levies are an essential tool for contributing both to shipping’s energy transition and to a just and equitable transition leaving no states behind, because unlike other policy options, they enable targeted distribution of significant revenues which can reduce inequities that occur due to the generalised cost increases associated with reducing shipping’s GHG emissions.

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