The world’s first global carbon tax is an agreement to impose a carbon tax on the commercial shipping industry . This agreement was reached by 63 countries, including India, at the UN’s International Maritime Organisation (IMO) in London .
Key Details:
- Objective: To reduce greenhouse gas emissions from the shipping sector, which accounts for approximately 3% of global emissions .
- Mechanism: Beginning in 2028, ship owners will be required to use cleaner fuels or face financial penalties .
- Tax Amount: If a ship uses conventional fuel in 2028, it would have to pay $100 to $380 per tonne of emission, depending on crossing the threshold of ‘base’ and ‘direct compliance’ targets .
- Revenue Generation: The carbon tax is estimated to generate up to $40 billion by 2030 .
- Use of Funds: The generated funds will be dedicated to decarbonizing the shipping industry . The IMO Net-Zero Fund will reward low-emission vessels and support technological innovation, and assist vulnerable states in managing transition costs .
- Scope: The carbon pricing measures will be mandatory for large ocean-going ships of over 5,000 gross tonnage, which emit 85% of the total carbon dioxide emissions from international shipping .
- Timeline: The agreement is set to be formally adopted in October 2025 and is expected to go into effect in 2027 .
- Voting: 63 countries voted in favor, 16 countries, including Saudi Arabia, the UAE, Russia, and Venezuela, voted against, and 25 countries, mostly small island nations and Argentina, abstained. The U.S. delegation was not present for the vote .
- Emissions Reduction: The measure is expected to reduce emissions by 8% by 2030 .
- IMO Targets: The IMO has pledged to reduce total annual greenhouse gas emissions from international shipping by at least 20% by 2030, compared to 2008, with the goal of reaching net-zero emissions by around 2050 .
- Broader Measures: The agreement is part of a broader framework that includes mandatory emissions limits and a global fuel standard, requiring gradual reductions in the annual GHG fuel intensity of ships .
