India Joins 62 Countries to Support First Global Carbon Tax on Shipping Industry

India, along with 62 other nations, endorsed the world's inaugural global carbon tax on the shipping sector. This decision was made by the United Nations shipping agency at the International Maritime Organisation (IMO) headquarters in London. The initiative aims to curb greenhouse gas emissions from ships and encourage cleaner technologies. This marks the first instance of a global carbon tax being applied to an entire industry.

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Starting in 2028, ships will need to switch to fuels with lower emissions or pay a fee for their pollution. The tax is projected to generate up to USD 40 billion by 2030. However, all funds will be used solely to reduce emissions within the shipping industry, not for climate action support in developing countries.

Global Carbon Tax and Emission Reduction

Despite this significant policy shift, carbon pricing is anticipated to cut shipping emissions by only 10% by 2030, falling short of the IMO's target of at least 20%. The agreement received backing from countries like India, China, and Brazil but faced opposition from oil-rich nations such as Saudi Arabia, the UAE, Russia, and Venezuela.

The US delegation abstained from negotiations and voting. A coalition of over 60 countries, mainly from the Pacific, Caribbean, Africa, and Central America, advocated for a portion of the revenues to address broader climate finance needs. These nations, highly vulnerable to climate change impacts, expressed dissatisfaction with the final outcome.

Challenges and Criticisms

Tuvalu, representing Pacific Island nations, criticised the negotiation process for lacking transparency. They argued that the current design does not effectively promote a transition to cleaner fuels. Vanuatu's Minister for Climate Change, Ralph Regenvanu, stated that countries like Saudi Arabia and the US hindered progress and weakened proposals aligning shipping with the Paris Agreement's temperature limit.

The mechanism will charge ships based on emission intensity. For instance, vessels using conventional fuel in 2028 would incur USD 380 per tonne for their most polluting emissions and USD 100 per tonne for other emissions exceeding set thresholds. This pricing system will be implemented gradually to discourage fossil fuel use.

Future Steps and Environmental Advocacy

Although a basic framework is established, key technical details regarding revenue usage and distribution remain unresolved. The policy is expected to be formally adopted in October 2025. Environmental groups and negotiators from smaller countries plan to continue advocating for a more ambitious and equitable outcome that supports those most affected by climate change.

Laurence Tubiana, CEO of the European Climate Foundation and a key architect of the Paris Agreement, praised the IMO's decision as a positive step acknowledging that polluters should pay for climate damage. However, she deemed the agreement insufficient due to its lack of a proper shipping levy. Tubiana noted strong global public support for taxing polluting industries and wealthy individuals.

This development represents a pivotal moment in global climate policy but highlights ongoing challenges in achieving comprehensive solutions. The focus remains on refining details and ensuring equitable support for vulnerable regions while addressing environmental concerns effectively.