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A GHG emissions fee: the plan of Panama Canal to deal with carbon emissions

Starting soon, polluting vessels entering the Panama Canal will have to pay a fee on their
greenhouse gases emissions. The administrator of the Canal, Ricaurte Vásquez Morales,
announced that the Panama Canal authority will implement a “Green Vessel Classification”
system to which a “Greenhouse Gas Emissions Fee” will follow. It is the first time a
governmental entity promotes such an initiative.

Truth be told, the Canal has already put in place long ago a carrot and stick system to
incentivise green shipping, which consisted in a point system. This new fee, however,
represents a step further: all ships over 125 feet will be classified using categories based on
energy efficiency. The ranking will be based mostly on three factors: the use of zero-carbon
fuels, the vessels’ EEDI score and operational efficiency measures, such as the bow thrusters.
By using these factors as thresholds, emissions during a canal transit could be reduced by a
significant percentage. The system is however still work in progress and the amounts have
not been announced yet.

The Panama Canal is also putting in place a series of other initiatives to cut carbon
emissions, such as investing in a fleet of electric vessels or buying 10 hybrid-powered tugs.
These efforts are very much needed, since the Canal is extremely vulnerable to climate
change. Extreme droughts, such as the one of 2019, have pushed the authorities to act.
The government of Panama was also one of the countries supporting the ICS proposal for a
$2 per tonne global bunker fee presented at IMO MEPC 77. Although the proposal was not
successful, the Panama Canal will anyway be able to put in place its own unique fee
experiment to deal with carbon emissions.