Center for Markets in Transition CEMAT

NDI Policy Brief 11: Arctic shipping needs anti-avoidance rules to mitigate environmental disasters

Global warming will accelerate the melting of ice and release some of the Arctic territories for shipping. On the one hand, it will have a positive impact on world trade but on the other hand, the risk of ship accidents and environmental disasters will increase. In the period from 2010 to 2019, 512 ship accidents in Arctic Circle Waters were reported, not without damage to the environment.
Ships passing photo by Vidar Nordli Mathisen

However, today's legal structure of the shipping industry makes it virtually impossible to make the ultimate owners of ships liable and responsible for environmental costs. There is no international regulation that would pressure the shipping industry to increase its corporate responsibility and to make more sustainable decisions of using clean fuels, improving the environmental friendliness of ships, or recycling old ships.

  • Recommendation 1. To improve availability and transparency of ultimate beneficial ownership data in the shipping industry.
  • Recommendation 2. To develop mechanisms to hold the ship's ultimate beneficial owners liable for maritime incidents such as oil spills.
  • Recommendation 3. To design anti-avoidance rules applicable to the use of flags of convenience and last-voyage flags (in the spirit of anti-tax avoidance rules).

Download the NDI Policy Brief 11: Arctic shipping needs anti-avoidance rules to mitigate environmental disasters

Author: Dmitry Erokhin, International Institute for Applied System Analysis IIASA

This policy brief was written as a part of the NDI Policy Brief Training held in October 2020. 

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