‘Too Little, Too Late’: Developing Countries Disappointed at World’s First Carbon Levy on Shipping

Two dozen climate vulnerable countries that had rallied behind a proposal to charge commercial vessels a 1.5C-aligned, flat high fee, expressed disappointment at the agreement, saying it “would do too little, too late to cut shipping emissions and protect their islands.”

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Diplomats have agreed on a key climate policy for global shipping, including a levy on ships emissions that falls short of the industry’s climate targets and fails to protect climate-vulnerable nations.

The International Maritime Organization (IMO), the United Nation’s shipping agency, reached an agreement on Friday following two weeks of negotiations at the agency’s headquarters in London.

Commencing in 2028, a new levy system will be implemented affecting all ships worldwide. Under this system, vessels will be charged based on their greenhouse gas emissions. Initially, ships continuing to utilize traditional fossil bunker fuel will face a $380 fee for their most intensive emissions, alongside an additional $100 charge per ton of emissions surpassing a predefined threshold.

It is the first global carbon pricing scheme on any industry polluter.

Ships will also have the opportunity to engage in carbon credit trading among themselves. This mechanism is designed to motivate ship operators to modify their vessels to utilize low-emissions fuels and enhance operational efficiency.

Disappointment

The deal was passed in a 63-16 vote. Countries including China – the world’s largest ship-owning country – Brazil, and several other emerging economies had previously opposed the levy, but voted in favor of the carbon trading compromise.

Saudi Arabia, Qatar, Venezuela, the United Arab Emirates, Russia were among the petro-state nations opposing the text.

24 nations, including nine Pacific Island states abstained. The Pacific delegation said in a statement following the vote that the agreement “would do too little, too late to cut shipping emissions and protect their islands.” They were part of a coalition of over 50 countries across Europe, Africa, Asia, and the Caribbean, representing a majority of the world’s fleet, that rallied behind a proposal to charge commercial vessels a 1.5C-aligned, flat high fee for each tonne of carbon emitted.

The new measure is expected to generate approximately $10 billion annually, the Guardian reported, significantly less than the anticipated $60 billion annually from a flat carbon tax. The generated revenue is projected to be reinvested within the shipping sector to facilitate the adoption of cleaner technologies, rather than being allocated to vulnerable countries affected by severe weather events, as the proposed flat tax would have done.

The measure is expected to reduce emissions by 8% by 2030, according to figures by commercial shipping consultancy Umas cited by the Guardian. But in its latest climate strategy, the IMO pledged to reduce the total annual greenhouse gas emissions from international shipping by at least 20% by 2030, compared to 2008, to reach net-zero emissions by “around 2050.”

“Let us be clear about who has abandoned 1.5°C. Saudi Arabia, the US and fossil fuel allies pushed down the numbers to an untenable level and blocked progress at every turn,” said Ralph Regenvanu, the environment minister of Vanuatu.

The policy will be formally adopted in October this year and put into action by 2028, but some policy details still remain to be finalized.

The shipping industry is a vital artery of world trade, moving some 90% of goods across international waters. However, it is also one of the most carbon-intensive industries due to its reliance on fossil fuels, responsible for nearly 3% of all greenhouse gas emissions, primarily carbon dioxide. If shipping were a country, it would be the sixth largest emitter of planet-warming greenhouse gases worldwide, ranking between Japan and Germany, according to the World Bank.

US Exit

On Wednesday, the US confirmed it was withdrawing from the negotiations.

In the leaked note that was sent to ambassadors, the country said it “rejects any and all efforts to impose economic measures against its ships based on GHG emissions or fuel choice” and “urges your government to reconsider its support for the GHG emissions measures under consideration.”

Confirming the note, a State Department spokesperson added that it was the administration’s policy to put US interests first in the “development and negotiation of any international agreements,” Reuters reported.

The US also promised to “consider reciprocal measures” meant at offsetting any fees US ships may incur if the IMO adopts new emissions measures.

Learn more: High Stakes, Low Ambition: A Look Into IMO’s Fragile Shipping Deal