Reduction of GHG Emissions Not in Budget

Iam sure that a lot of Fijians have been going through the 2020-21 Budget and its associated fiscal and policy changes, looking to see what the Government has proposed in these challenging times.

Looking at the Budget from the shipping sector, there are a few key changes which should help with bringing down the costs of imported vessels, parts, motors, and associated materials and supplies.

There are also some missed opportunities, when you look at the Budget from the perspective of getting Fiji’s shipping sector on a 1.5oC pathway and achieving the ambitious decarbonisation targets of 40 per cent reduction in Greenhouse Gas emissions by 2030 and 100 per cent by 2050.

The Budget unashamedly is looking to attract investment and diversification, as well as providing support to the hard-hit tourism sector.

But the Budget is also encouraging spending on fossil fuel dependent asset, instead of taking this opportunity to incentivise green investment through levelling the costs of zero carbon options.

Some of the key changes that are positive include reducing the fiscal duty on Lithium ion batteries from 32 per cent to five per cent (these are key components of electric outboard and inboard motors for boats and make up a significant portion of the capex).

Sails have also had the fiscal duty dropped from 32 per cent to five per cent, again assisting in bringing down the cost of sails and therefore making retrofit of existing vessels where appropriate more appealing. On the other hand, fiscal duties on marine diesels and semi-diesel motors were removed, making diesel engines cheaper as well, and on all types of outboard motors.

I have mentioned before that one of the easiest ways to cut Fiji’s maritime transport emissions is by increasing fiscal and import duties on the least efficient 2-stroke outboards and making higher efficiency 4-strokes and electric outboards duty-free.

It is a shame that this Budget didn’t consider how the fiscal policy changes could also target reduction in Greenhouse Gas (GHS) emissions at the same time as encouraging investment by the private sector, and the general public by dropping costs.

The five per cent fiscal duty on imports of various types of ships, specialist vessels, floating structures has been removed, as has the 32 per cent fiscal duty on warships. Perhaps most encouragingly is the removal of the 32 per cent fiscal duty on life jackets and life belts. Regardless of what types of ships Fijians invest in, dropping the price of essential safety gear was a great move.

It is a shame that this budget didn’t consider how the fiscal policy changes could also target reduction in Greenhouse Gas (GHS) emissions at the same time as encouraging investment by the private sector, and the general public by dropping costs.The five per cent fiscal duty on imports of various types of ships, specialist vessels, floating structures has been removed, as has the 32 per cent fiscal duty on warships.