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UK government missing out on nearly £2bn a year by not taxing shipping pollution
(Transport and Environment, 6 Feb 2023) Applying polluter pays principle to pollution from ships would benefit the climate and provide a boost for public finances.
Cash-strapped Britain could benefit from an additional £1.8 billion a year if it were to tax shipping emissions, a new Transport & Environment (T&E) analysis shows. Pricing the UK’s shipping emissions is a win for the climate and a win for the exchequer, says T&E.
UK shipping activity was responsible for 22 million tonnes of CO2 in 2021 – equivalent to a third of all the UK’s cars. If the UK government were to include all the sector’s emissions in its cap and trade scheme – the UK ETS – these emissions could generate nearly £2 billion annually. However, T&E’s analysis shows that with the government’s current plans, less than 10% of UK shipping emissions would be covered, generating just £170 million a year.
The government is currently considering an extension of its carbon market into shipping but only to ships that are above 5000 gross tonnage (GT) and making domestic voyages. This means a cargo or passenger ship sailing, for example, from Felixstowe to Calais or from New York to Liverpool, would not be made to pay anything. This is despite these international voyages making up for about 90% of the UK’s shipping emissions.
Jon Hood, sustainable shipping manager at T&E UK, said: “The government is currently forfeiting nearly two billion pounds a year by not pricing shipping pollution. With public debt and borrowing costs at an all time high, this would raise significant funds with the added bonus of helping the UK on its path towards net zero. It’s a win-win.”
Transport and Environment, 6 Feb 2023: UK government missing out on nearly £2bn a year by not taxing shipping pollution
