UN Passes First-Ever Global Carbon Tax on Shipping Industry
The agreement comes months after UN climate talks in Baku in November 2024, where countries agreed to a post-2025 $1.3 trillion climate finance deal to support developing countries.
LONDON— The United Nations' International Maritime Organization (IMO) approved the world's first carbon pricing mechanism for a major polluting industry on Friday, targeting the global shipping sector despite opposition from several oil-producing nations, writes Winston Mwale.
Diplomats at IMO headquarters in London voted to adopt a global framework that will put a carbon price on shipping emissions to help the industry decarbonize and encourage cleaner technologies.
The policy is expected to be formally adopted in October 2025, though several technical details remain unresolved.
The framework, which passed with 63 countries voting in favour, 16 against and 25 abstentions, will impose fees on shipping emissions starting in 2028. It could generate $30-40 billion in revenue by 2030, approximately $10 billion annually.
"The shipping industry has taken the lead in showing other hard-to-abate sectors that climate action is possible," said Maria Ogbugo, Senior Associate at African Future Policies Hub.
Starting in 2028, ships must either transition to lower-carbon fuel mixes or pay for excess emissions.
Vessels continuing to use conventional fossil fuels will face a $380 per tonne fee on their most intensive emissions and $100 per tonne on remaining emissions above certain thresholds.
Countries supporting the measure included Brazil, China, the European Union, South Africa, Kenya, Senegal and Namibia.
Opposition came from Saudi Arabia, UAE, Russia, Venezuela and other petro-states. The United States delegation was not present during the vote.
The agreement is projected to deliver at best a 10% absolute emissions reduction in the shipping sector by 2030 — far short of the IMO's own targets calling for at least a 20% cut by 2030, with a stretch goal of 30%.
"In the end, the best possible outcome was achieved," Ogbugo said. "African delegations must be commended, including Kenya, Namibia, Senegal, South Africa, and others who rose to the occasion and supported the compromise."
Critics argue the plan falls short of climate needs, particularly since the collected funds will be restricted to decarbonising the maritime sector rather than broader climate financing for developing countries.
This disappointed a coalition of over 60 countries led by Pacific nations who sought wider distribution of the revenue.
"Let us be clear about who has abandoned 1.5°C," said Ralph Regenvanu, Vanuatu's Minister of Climate Change. "Saudi Arabia, the US and fossil fuel allies pushed down the numbers to an untenable level and blocked progress at every turn."
Tuvalu, speaking on behalf of Pacific nations, voiced disappointment during the plenary session, raising concerns about lack of transparency, exclusion of vulnerable nations from negotiations, and suggesting the new plan will fail to incentivize cleaner fuels.
Minister Antony Derjacques of the Seychelles said: "The developing countries with the greatest need came here and offered a solution. How can the other major economies ask us to take a weak deal home to our people, who are suffering as a result of the climate crisis?"
Ambassador Albon Ishoda, Marshall Islands Special Envoy for Maritime Decarbonization, remained defiant: "We are not done. We will be back. Alongside our friends from the Caribbean, the Pacific, Africa, Central America, and the UK. Still standing. Still steering."
The carbon pricing mechanism will initially allow the use of fossil liquefied natural gas (LNG).
However, the regulation will progressively penalize the use of gas by the shipping industry.
The agreement comes months after UN climate talks in Baku in November 2024, where countries agreed to a post-2025 $1.3 trillion climate finance deal to support developing countries in the energy transition.