Agreeing to a setting a carbon pricing mechanism for shipping emissions, a global framework has been cut at any cost by 63 countries, including India, Brazil, Russian Federation, China, Japan, as well as the EU member states, a landmark move. A deal was struck Friday during the closing plenary of the meeting of the United Nations’ International Maritime Organization (IMO), to which India was represented by its Ministry of Shipping.
It is the first-ever global shipping carbon tax that will support the shipping industry in decarbonising and shifting towards cleaner technologies. But many technical details are still to be discussed and the policy is expected to formally come into force by October 2025. The mechanism is to be implemented and is expected to generate $30 to $40 billion in revenue by 2030, or $10 billion in revenue every year.
In 2028, ships will have to be using different fuels or pay for the particulate matter they produce. The remaining vessels will pay $380 per tonne for the most carbon-intensive bit of their emission and $100 a tonne for emissions exceeding set thresholds. The pricing scheme is set in a way that encourages people to adopt greener practices in maritime transport.
While a groundbreaking step, experts agree that it will only realize a maximum of ten per cent of absolute emissions reduction in the shipping sector from 2030 onwards. This is less than the IMO’s new 2023 climate targets to cut at least 20 per cent below 2005 levels by the end of the decade, though a stretch target of 30per cent was also included.
But some of the biggest oil export nations, such as Saudi Arabia, Russia, the UAE, Venezuela and others opposed the policy, saying it could hurt trade and fragile economies. However, the backing of this wide-ranging coalition of nations reflects in growing global unanimity in support of the urgency to act on climate change in the international shipping sector.
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