India and 62 other countries voted in favour of the world’s first-ever global carbon tax imposed on the shipping industry by the International Maritime Organisation (IMO). The decision was taken at the IMO’ headquarters in London on April 11, 2025.
Key Highlights
- For the first time a global carbon tax has been imposed on an entire industry.
- The deal was supported by 63 countries, including India, China and Brazil, but opposed by oil-rich nations like Saudi Arabia, the UAE, Russia and Venezuela. The U.S. delegation did not participate in negotiations and was absent during voting.
- Starting 2028, ships will either have to shift to lower-emission fuels or pay a fee for the pollution they generate.
- The tax could generate up to $40 billion by 2030.
- All revenues raised from the carbon tax will be used for decarbonising the maritime sector and will not be allocated to broader climate finance efforts, such as helping countries adapt to climate change or recover from its impacts.
- Carbon pricing is expected to reduce shipping emissions by only 10% by 2030, far short of the IMO’s own target of at least 20%.
- Under the mechanism, ships will be charged based on the intensity of their emissions. For example, vessels using conventional fuel in 2028 would pay $380 per tonne for the most polluting portion of their emissions and $100 per tonne for other emissions that exceed defined thresholds.
- This pricing system will be applied in stages and is designed to gradually penalise the use of fossil fuels, including liquefied natural gas.
Criticism:
- Developing nations and vulnerable countries pushed for a share of revenues for broader climate finance—not included in the final deal.
- Many argue it falls short in supporting climate justice and adaptation needs for poorer countries. A group of more than 60 countries, largely from the Pacific, Caribbean, Africa and Central America, had pushed for a share of the revenues to be directed towards broader climate finance needs.
