This technical paper explores the potential implications of a carbon levy on international aviation and marine transport on Caribbean economies through the following approach of situational analysis:

An examination of emissions from international aviation and shipping in the context of climate change, including impacts on future global average temperature
An analysis of the reliance of Caribbean economies on external tourism
An analysis of the reliance of Caribbean economies on the transport of goods and services
Document Review
A review of technical and policy documents on initiatives to implement levies on international aviation and marine transport

The research concludes that any imposition of a levy on international transport, whether aviation or maritime shipping, can have potential impacts on the countries of the Caribbean in their key economic activities – trade and tourism.

The opposition to the EU ETS from many countries (the Moscow Declaration) indicates that unilateral measures to address greenhouse gas emissions that may impact negatively on third countries would not find favour as a possible approach to finding a solution to climate change irrespective of its compliance with international law.

Additionally, the response of Caribbean governments to the APD, including their recommendations for reform, signal the relatively high sensitivity with which such measures are treated in the region. The proposals currently under consideration under the IMO for levies on international shipping all have potentially negative economic impact on the region.

However, working through multilateral fora, including the ICAO, the IMO and the UNFCCC, can produce a result that is acceptable to the Caribbean.