India Supports First Global Carbon Tax to Decarbonise Shipping Sector

13-04-2025

06:20 AM

1 min read

What’s in Today’s Article?

India and 62 other countries voted in favour of the world's first-ever global carbon tax imposed on the shipping industry by the United Nations' shipping agency.

In a historic development, India has joined 62 other nations in supporting the world's first-ever global carbon tax imposed on the shipping industry.
The agreement was reached at the International Maritime Organisation (IMO) headquarters in London on April 11, 2025.
This marks a significant step in the global fight against climate change, especially in a sector previously untouched by the Paris Agreement.

Commercial shipping contributes about 3% of global greenhouse gas emissions. Despite this, it had remained outside the scope of global climate pacts like the Paris Agreement. The new decision by the IMO aims to plug that gap.
This carbon pricing system, which will come into effect in2028, will require large vessels (above 5,000 gross tonnage) to either adopt cleaner fuel technologies or pay a penalty based on their emission intensity.
According to the agreement:
- Ships will pay $100 to $380 per tonne of CO₂ emitted, depending on compliance thresholds.
- The policy aims to generate up to $40 billion by 2030, which will be reinvested to decarbonise the maritime sector.

India, along with countries like China, Brazil, South Africa, the EU, Norway, Japan, and Singapore, voted in favour of the resolution.
Their collective support highlights a growing international consensus on the need to decarbonise maritime operations.
However, oil-producing nations such as Saudi Arabia, the UAE, Russia, and Venezuela voted against the resolution.
Interestingly, the United States abstained from voting altogether, maintaining its stance of not participating in the negotiations.

While the agreement is a bold step, experts argue that the current framework falls short of climate goals:
- It is projected to reduce shipping emissions by only 10% by 2030, whereas the IMO's own target is a 20-30% cut by that year.
- Additionally, revenues will be exclusively allocated to the maritime sector, excluding broader climate adaptation or mitigation efforts, which has sparked criticism from vulnerable island nations.

Many developing countries and small island nations expressed disappointment:
- They advocated for a portion of the revenue to support broader climate finance needs.
- Countries like Tuvalu and Vanuatu criticized the lack of transparency and the weakened ambition in the final design.
- The policy’s failure to support the 1.5°C temperature goal under the Paris Agreement was seen as a missed opportunity.

Though the framework has been approved, several operational aspects remain undecided:
- The policy is set to be formally adopted in October 2025.
- Mechanisms for revenue distribution, emissions verification, and compliance tracking are still being negotiated.
Environmental advocates have vowed to continue pushing for a more ambitious and inclusive approach in subsequent rounds of negotiation.

Q1. What is the purpose of the newly introduced global carbon tax on shipping?

Ans. It aims to reduce greenhouse gas emissions from the shipping industry and promote cleaner technologies.

Q2. When will the global carbon tax on shipping come into effect?

Ans. The carbon tax will be implemented starting in 2028.

Q3. How much could the global carbon tax generate by 2030?

Ans. It is estimated to generate up to $40 billion by 2030.

Q4. What will the revenue from this tax be used for?

Ans. All revenue will be ring-fenced exclusively for decarbonising the maritime sector.

Q5. Did all countries support the carbon tax?

Ans. No, while 63 countries supported it, 16 opposed it, 25 abstained, and the U.S. did not participate in the vote.

Source : TH | TOI