A proposed tax on greenhouse gas emissions from the shipping sector has garnered large-scale support from the world’s biggest economies, but some argue it will hurt developing nations
March 4, 2025
A new global tax on shipping emissions is growing in support and is expected to be agreed on in the coming weeks. The tax, which would see a flat fee imposed for each tonne of carbon emitted by commercial vessels, has seen backing from over 50 countries across the globe, accounting for a large amount of the world’s fleet. However, initial talks at an International Maritime Organization (IMO) conference last week provided little tangible progress.
Shipping has long been one of the largest sources of greenhouse gas (GHG) emissions. In 2018, it accounted for over 1 billion tonnes of CO2 emissions and was responsible for around 2.9% of man-made global emissions. These emissions are only expected to grow: By 2050, they are projected to be 130% of 2008 levels.
The European Commission and the International Chamber of Shipping, along with large shipping nations such as Japan, Korea, Greece, and the United Kingdom, have stated that the tax should be in the range of $18-150 per tonne of emitted greenhouse gas.
A study conducted in 2024 by UN Trade and Development and the IMO concluded that a levy of between $150 and $300 per tonne of greenhouse gas would limit the negative impact on the global economy. This would only be the case, however, if the tax revenue were then distributed to the countries most vulnerable to climate change. Considering that shipping accounts for the carriage of 90% of goods in world trade, the worry is that the tax would be inflationary and detrimental to the world economy. Although with or without the proposed tax revenue redistribution, global GDP growth would be expected to slow marginally, by slightly less than 0.1%.
“The industry fully supports the adoption by IMO of a GHG pricing mechanism for global application to shipping,” stated Gu Platten, Secretary General of the International Chamber of Shipping. “The joint text put forward by this broad coalition is a pragmatic solution and the most effective way to incentivise a rapid energy transition in shipping to achieve the agreed IMO goal of net zero emissions by or close to 2050.”
The goal of the levy would be to incentivize shipping companies to look for cleaner energy alternatives, as traditional fossil fuel usage would become more expensive. In theory, this would mean a transition to more sustainable fuels such as biofuels, methanol, hydrogen, or ammonia.
The ongoing debate now within the IMO is whether the levy’s revenues should be used only for shipping-related activities or if they could be used more broadly at the discretion of national governments. For example, a study released by University College London, along with two French think tanks IDDRI and CIRAD, found that the tax would naturally raise transportation costs, disproportionately impacting Small Island Developing States (SIDS) and other developing countries. In turn, this could affect food security and public health in certain nations in the short- and medium-term. Many therefore argue that any shipping tax revenue that is redistributed should be freely used to combat any spillover effects from higher shipping costs.
Even with the overwhelming support for the levy itself, the negotiations at last week’s IMO meeting in London were key to addressing the economic consequences of any tax imposed. Little concrete progress was made, with details still to be negotiated. At the moment, there are differing views on the exact amount that should be charged per tonne of emissions and what the revenue should be spent on.
Still, support for the proposition as a whole remains strong.
“With 70% of tonnage now supporting a global fuel standard along with a carbon levy, it is crucial that the upcoming round of negotiations focuses on discussing the distribution of revenues, both within and outside the shipping sector,” explains Dr. Annika Frosch, a Research Fellow at University College London’s Energy Institute.
Should the levy be agreed to in the coming months, it is expected to take effect in 2027. The work now is “no longer about whether a levy is needed,” according to Albon Ishoda, Marshall Islands Special Envoy for Maritime Decarbonization. Instead, it is “about ensuring [the levy] is strong enough to be effective.”
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This article was originally published on IMPAKTER. Read the original article.