Carbon tax could shift some Icelandic fishing landings to Faroes

Brim chief executive Guðmundur Kristjánsson says Iceland’s carbon tax is undermining the country’s competitiveness and could make it economical for some fishing vessels to land catches in the Faroe Islands. He made the comments to mbl.is.

Kristjánsson said vessels fishing off Iceland’s east coast could find it worthwhile to land in the Faroes, where there is no carbon tax, and refuel. He pointed to a German trawler taking on fuel in Iceland before heading to fish near Greenland, saying it pays no carbon tax. The Icelandic Coast Guard also avoids the charge when it refuels in the Faroes, he said.

A new analysis by the Association of Fisheries Companies (SFS) says Iceland stands apart from its main competitors: other countries have exempted fishing vessels from similar charges, delayed them or compensated operators. SFS says the carbon tax on fossil fuels, introduced to encourage the shift to cleaner energy, has increased tenfold in nominal terms since it was first imposed.

Kristjánsson said fishing companies had already been reducing fuel use before the tax was introduced. But the industry has no practical way to switch to electric vessels, he said, because the technology is not available for its needs. He warned that continued high taxation would hurt value creation in Iceland.

He also questioned whether earmarking the tax revenue for energy-transition projects would help. SFS says available data do not show that the carbon tax has had a decisive effect on fuel use in the fishing industry, and it wants the charge reviewed in light of the rules faced by competing countries.