The financial implications of a Levy & GHG Fund

This paper reviews the financial capabilities of a Levy on carbon dioxide emissions from international shipping as proposed in the International Maritime Organization (IMO) by Cyprus, Denmark, the Marshall Islands and Nigeria. The conclusion is that a relatively high levy would be required to create the resources needed for satisfying all four objectives brought forward by the proponents and in addition provide compensation to developing countries based on the principle of no net incidence. Choosing a low and stable rate would force the decision maker to forsake the task of offsetting any shipping emissions above a proposed (declining) cap, which would make the scheme less environmentally effective.