India, 62 other countries agree to adopting global shipping tax
The policy was backed by 63 countries including Brazil, China, EU, India, Japan, South Africa, and Singapore. But petro-states like Saudi Arabia, UAE, Russia, and Venezuela opposed the agreement
New Delhi: Parties at the UN’s International Maritime Organization (IMO) have agreed to the world’s first-ever carbon pricing mechanism or a carbon tax on global shipping.
On Friday, countries including India, Brazil and China voted during the closing plenary to adopt a global framework that will put a carbon price on shipping emissions that will also help the industry decarbonise and encourage the use of cleaner technologies. India was represented by the Shipping ministry.
The tax is expected to be formally adopted in October 2025, though several technical details need to be worked out. The tax will generate $30–40 billion in revenues by 2030, roughly $10 billion annually. The agreement is projected to deliver at best 10% absolute emissions reduction in the shipping sector by 2030- far short of the IMO’s own targets set in their 2023 revised strategy, which calls for at least a 20% cut by 2030, with a stretch goal of 30%, assessments said
Starting in 2028, ships will be required either to transition to lower-carbon fuel mixes or pay for the excess emissions they generate. Vessels that continue to burn conventional fossil fuels will face a $380 per tonne fee on the most intensive portion of their emissions, and $100 per tonne on remaining emissions above a certain threshold.
The policy was backed by 63 countries including Brazil, China, the EU, India, Japan, South Africa, and Singapore. But petro-states like Saudi Arabia, the UAE, Russia, and Venezuela opposed the agreement.
“The shipping levy agreed on is a compromise, with the US not in support of many elements of the plan. It will apply to emissions above a certain target of decarbonisation as opposed to per ton of emission. It is expected that although there will be an incentive to shift to alternative fuels, this shift will be slower. The shipping industry accounts for 3 per cent of emissions and is not covered under Paris Agreement, making the levy a significant development. Yet, it remains to be seen if the US responds with retaliatory actions and how the revenues are redistributed,” said Suranjali Tandon, Assistant Professor, National Institute of Public Finance and Policy in a statement.
.jpg)
.jpeg)
