Monday, July 2, 2012

Carbon Taxes Upset Global Freight and Passenger Interests Alike

From India to Tasmania Nobody Likes to Pay Higher Environmental Costs
Shipping News Feature

EUROPE – TASMANIA – WORLDWIDE – The problems associated with reducing carbon emissions to achieve the various targets agreed or aspired to by Governments and freight and passenger carriers across the globe normally come down to a single relevant factor – cost. Two schemes on opposite sides of the world illustrate the point perfectly upsetting freight and passenger carriers and importers and exporters alike.

As the onus swings between direct taxation of carbon rich fuels, which in themselves do not mitigate the amounts of pollution produced, to emission taxation based on the actual tonnage of CO2 produced such as the EU Emissions Trading System (EU ETS), so howls of protest arise from every quarter. The EU ETS has been in position since 2005 but with the aim of cutting EU overall emissions by 21% by 2020 airlines world wide have been asked for data so they can be taxed from this year.

In the last month the EU scheme, which has already been heavily criticised from within the Community, received its severest body blow when India threatened to ban European airlines from its airspace if the plan goes ahead. This follows the well publicised financial problems of both the major Indian carriers, Air India and Jet Airways.

It seems everybody is against the EU scheme which is viewed as self serving and totally impractical by airlines from BA to Brussels Airlines and from the US to Russia, China and beyond. The scheme is patently unfair in its current form and may lead to transhipment of cargo and passengers, or merely momentary landings in countries like Turkey, currently outside the EU minimising liability by extracting the non EU transit mileage the aircraft incurred on its original journey.

Now a similar argument is being heard in Tasmania where some analysts estimate a 2 or 3% hike in the price of general products as the Government tries to reduce CO2 levels by 5% in the next 8 years with firstly a carbon tax which is due to be superseded by a carbon trading scheme in 2015. Neither of these is proving popular with voters as the Government watches its popularity slump and demonstrators hit the streets.

The Tasmanian opposition says the schemes will impinge particularly on the islanders with higher freight costs for import and export freight as bunker fuel prices spiral upward. The various compensatory packages are viewed as a sop by the objectors who say the Bass Strait is supposed to be an integral part of the ‘National Highway’ and yet they are becoming uncompetitive due to the extra costs.