Shipping company Maersk (Ticker AMKBY) has purchased 8 carbon neutral tankers to prove its commitment towards a green future. The carbon neutrality in the tankers comes from low emitting methanol fuel.

The shipped are pegged to be completed in 2024 saving 1 million tons of carbon emission. In addition, the ship capacity will be 16,000 shipping containers.

Hyundai will be providing the facilities to build the tankers. Currently, each tanker comes in at a price tag of $175 million meaning the total investment will be around $1.4 million. As well, there are talks of Maersk buying four more additional tankers.

Many large companies such as Apple and Amazon have set carbon neutrality targets. Now, the shipping industry is taking steps towards a net-zero future. The shipping industry accounts for 3% of carbon emissions worldwide. Moving the shipping sector towards carbon neutrality is a huge step in the fight against climate change.

The CEO of Maersk is committing to a greener future, saying “The time to act is now if we are to solve shipping’s climate challenge”. In addition, the company said it was committed to helping customers seek a greener future, as well as helping customers decarbonize supply chains. This is a huge step in the shipping industry towards carbon neutrality.

Scope 3 carbon emissions are emissions that do not come directly from a company or assets they own. Nonetheless, those emissions are still emissions. Emissions that fall under this category include emissions from the transportation of the good or how a consumer uses the product. With all this information, the SEC is still considering whether to include these emissions when considering the carbon neutrality of companies.

The problem when considering indirect emissions into regulations is that they are usually the largest and hardest to detect. How can a company find out how consumers use their product? It requires a lot of assumptions into calculating final numbers, many of which are wrong.

The IPCC report that outlines the impending danger of climate change urges immediate action. The SEC mentioned that many companies offer voluntary disclosures regarding scope 1 and 2 emissions. They have also discussed with companies how to disclose indirect emissions. There is still nothing concrete about how companies should disclose their emissions yet.

Scope 3 emissions account for around 65-95% of a company’s total carbon output. In turn, indirect emissions, therefore, have the most potential for reductions. But scope 3 emissions should be released and open if there is to be any reduction of emissions to keep companies accountable.

The UN recently released a report outlining the urgent dangers of climate change. This has led to debates about how individual countries are implementing carbon laws to reduce emissions, specifically Germany.

A British MP stated that major countries are vital to reducing the effects of climate change. One such country being targeted by the MP, John Redwood, is Germany. Mr. Redwood is quoted as saying “It’s only going to work if Germany, which puts out twice as much as we do, starts to take the issue seriously and closes down its coal power stations.”

According to the European Environment Agency, Germany produced 853.3 Mt of carbon dioxide emissions in 2019. In the same year, the UK produced 365.1 metric tons of CO2. The evidence does support Mr. Redwood’s claims.

However, many factors come into play for these numbers. Manufacturing is a large industry in Germany. 23% of Germany’s GDP comes from manufacturing, compared to 11% of the UK’s GDP. Manufacturing is a high-emitting industry.

In addition, the UK has a smaller population. Around 17 million more people live in Germany.

One massive problem facing the central European nation is its reliance on coal power. Around 25% of German power comes from coal power plants. Coal is one of the worst ways to produce power in terms of reducing carbon emissions.

Germany has pledged to remove all coal power plants by 2038 but that may not be fast enough to stop climate change.

Democratic Senator Ben Cardin from Maryland stated there is support in the Senate to institute a carbon tax. The discussions come as the EU and China have already implemented measures to curb carbon emissions

With the Glasgow Climate Change Conference is coming up in November, the U.S. has yet to announce in what direction they will move to reduce carbon emissions.

The recent report from the IPCC has concerned world leaders. Global temperature levels are increasing far quicker than expected. The limit of 1.5 degrees Celsius above pre-industrial levels is close.

The report stated if immediate action is not taken, then temperature levels will rise above what is required for normal weather.

A carbon tax would increase taxes on businesses and industries which pollute the most. Specifically, in terms of carbon emissions. This would include increasing gasoline and natural gas prices in households.

The white house has previously mentioned it is leaning towards implementing clean electricity throughout the states, rather than a carbon tax. But the impending danger of climate change may implore President Biden to create many facets to reducing carbon emissions.

Currently, Democrats have introduced laws requiring fossil fuel producers to pay into a climate fund related to the number of emissions produced.

The U.S. is the second largest emitter of carbon emissions in the world currently. Important decisions await President Biden as the climate crisis grows.

The European Union has announced a plan to become carbon neutral by 2050. The plan outlined in the European Green Deal was drafted to meet the EU’s commitment to the Paris Climate Agreement.

The Paris Agreement aims to keep the Global Temperature increase to less than 2°C. However, now there is legislation in the union to pursue the goal of 2°C.

Each member state is to devise its own plan of action to reducing emissions.

Plans of Action

The plan is to impact many of the sectors within the member states. The automobile industry will be subject to major changes as diesel and gasoline cars are to be phased out by 2035. In addition, both electric and hydrogen charging stations will be required to be installed along major highways, spaced 60 kilometers apart.

Carbon Taxes

The EU is also looking at introducing carbon tariffs on products being made outside of the EU, where emission laws are less strict. Previously, G20 leaders had been discussing carbon pricing and tariffs as a useful mean to combat climate change. The mindset surrounding carbon pricing has changed, which can only aid in the fight against climate change.

As a result, it will encourage EU member states to import goods locally. Initially, the carbon tariffs will affect natural resource sectors such as iron and steel followed by other sectors.

It will be difficult for smaller union states to adjust their economy to match the demands of the EU. The nations who rely on importing natural resources from outside the EU will be affected the most and may cause the negotiations to falter.

Carbon Pricing mechanisms are still new ideas in the scope of reducing carbon emissions. The EU and China both have outlined plans to tax carbon in different ways. Canada itself does have a carbon tax in place, however foreign carbon pricing could affect Canada’s industry in a negative way, according to a report by the Royal Bank of Canada.

The report states that foreign tariffs on carbon would hurt the Canadian economy. Extra fees on exporting goods are never good for the economy. As an example, the EU plans on tackling climate change involves tariffs on industries that produce high level of carbon emissions. The industries targeted are aluminum, cement, iron and steel, fertilizers, and electricity.

For now, none of those industries are major Canadian exports to the EU however times change and the race against climate change is heating up. The UN released a report urging significant actions to stop climate change. Further industries could be affected, ones that will reduce trade between Canada and the EU.

Another major concern is how the U.S. will apply its own carbon plans. Any carbon pricing or tariffs on Canadian exports to the U.S. would be a huge blow to the economy. Hindering any trade with the U.S. would reduce trade with Canada’s largest trading partner. Another possibility is a North American carbon tariff as to not isolate Canadian trade.

The UN released a report recently that outlayed how little time there is to stop climate change. A United Nations climate change conference is scheduled for November where big decisions will need to be made in order to stop global warming. One such method is the implementation of a global carbon price.

Currently, the goal of keeping temperatures under 1.5 degrees of pre-industrial levels looks difficult. It is still a possible goal however it would require immediate and drastic action on a global scale. The problem countries are facing however is how to implement a global effort to reduce carbon emissions.

What may work in one country may not work in another. Previous agreements allowed nations to pick their own voluntary standards. However, urgency is high as ever and that may not solve the crisis. The EU recently put forth their own carbon pricing mechanisms but that is not enough to solve the world’s problems.

The IMF is proposing to create global carbon floors where floors would be created for countries to trade carbon at standard prices. This would include setting higher prices for developed countries and letting developing countries pay less for carbon emissions. Although these floors would be higher than what countries are currently paying for carbon emissions. This would be a huge step in the fight against climate change.