Future of maritime decarbonization at stake as carbon levy attracts supporters, opponents

Thirteen additional countries supported a global carbon levy on shipping at the International Maritime Organization (IMO) climate talks in London this week. However, its adoption still seems to be a long way off.

These are Dominica, Georgia, Grenada, Kiribati, Malawi, Mexico, Namibia, Nauru, New Zealand, Senegal, Switzerland, Trinidad and Tobago, and Türkiye, according to delegates at the talks.

The countries said they align themselves on the issue with 48 states from the Caribbean, the Pacific, Africa, Asia and Europe—a majority of the world’s shipping fleet—agreeing a future levy should be in the price range of $18-150/tonne of greenhouse gas.

“While we’re confident that IMO Member States will meet the ambitious timeline they set themselves, ISWG-GHG 18 showed how much progress is still needed on some key issues, in particular the economic measure. We saw strong support this week from over 50 countries, several speaking for the first time, for a levy or contribution that places a price on all of shipping’s GHG emissions,” Blánaid Sheeran, Policy Officer, Climate Diplomacy, Opportunity Green, commented.

“In spite of this, there remains a serious risk that a strong pricing mechanism that prioritises justice and equity will not be adopted. It’s crucial that Member States stand by their commitment to promote a just and equitable transition for international shipping.”

In parallel to carbon pricing, governments also negotiate on a global fuel standard (GFS), aimed at driving up the use of zero-emission energy on ships to effectively fully power the sector by 2050.

Ahead of this week’s discussion, Transport & Environment and +60 conservation NGOs called against the inclusion of biofuels in the shipping’s future energy mix. The organizations explained that biofuels cause ‘devastating’ impacts on climate, communities, forests and other ecosystems and therefore cannot be part of the solution to the climate crisis.

Key questions regarding the exact price, scope, and revenue distribution of the levy, as well as the details of the GFS, still remain to be resolved.

This week’s discussion lends further political momentum to get a carbon levy finalized in April and adopted in October at the IMO, which would be the world’s first universal fee on an international polluter.

A deal at the IMO would revitalize international coooperation and multilateralism at the UN fora and ahead of the COP.

Expert economists at UNCTAD say a levy is necessary as the ‘best way’ to deliver shipping’s energy transition in a low-cost way, and generate revenues for climate adaptation and mitigation in and out of the sector.

The World Bank estimates that a levy of $100/tonne GHG would generate up to $60 billion a year in revenues. An ongoing discussion at the IMO is how much of this sum should be allocated to developing and climate-vulnerable countries.

Revenue generated will be used to reward the production and uptake of zero/near-zero GHG emission (ZNZ) fuels while providing billions of US dollars annually to support maritime GHG reduction efforts of developing countries.

“What is clear is that we need alternative sources of funding to address mounting costs of the climate crisis, and to build resilience particularly in the most vulnerable countries. Thoughtfully designed levies on the most polluting sectors–notably maritime–can play a meaningful role to play as part of the mix. It is incredibly encouraging to see support for this from some fifty countries, including those with the majority of shipping fleets,” Pepukaye Bardouille, Special Adviser on climate resilience to the Prime Minister of Barbados and Director of the Bridgetown Initiative, said.

“ISWG-GHG 18 is a test of IMO’s credibility. Without a universal levy, IMO’s climate targets are meaningless. This is the fastest, most effective, and lowest-cost way to ensure a just and equitable transition, where no one is left behind. Delays cost lives. The time for action is now,” Ambassador Albon Ishoda, Marshall Islands Special Envoy for Maritime Decarbonization, stressed.

Universal carbon tax and opposing voices

Brazil, along with several other countries, has expressed an opposing stance regarding the proposed carbon levy. Paradoxically, such a stance comes from a country which prepares to host the United Nations Framework Convention on Climate Change (UNFCCC COP 30) Belém, Pará, in November 2025.

In late January 2025, Brazil, Angola, Chile, China, Colombia, Ecuador, Indonesia, Paraguay, Peru, the Kingdom of Saudi Arabia, South Africa and Uruguay submitted a letter to the IMO, presenting reasons and explaining the negative effects that would be caused by an independent universal GHG contribution.

Specifically, the countries believe that the proposed levy could endanger exports from developing countries, raise food prices and increase inequalities among and within countries.

“It is paramount to recall that the objective of the measures under negotiation is to reduce GHG emissions from shipping, and the effective way of doing that is by fostering all available solutions/energy sources and technologies by narrowing or closing the price gap. A levy would accomplish that while taxing 100% of emissions; but since even the least emissive solutions imply in some GHG emissions on a well-to-wake basis, the costs end up levelling at a much higher level, with magnified impacts across the economic systems reliant on maritime transportation,” the countries stated in the letter.

“This approach risks disproportionately affecting developing nations and industries that rely heavily on affordable shipping, further exacerbating economic inequalities. There are, however, other ways of narrowing or closing the cost gap. Instead of levelling the costs upwards, with the undesirable impacts mentioned in this paper, flexible compliance mechanisms level the costs in a more efficient manner, by making them meet “halfway”, at an intermediary point, by disincentivizing high emissions and, at the same time, providing incentives for the uptake of eligible fuels.”

They added that the impact of the carbon tax would be small, reducing GDP from 0.03 to 0.07%.

The question remains if the real reason behind rejecting the carbon levy is that many of the letter signatories are export-oriented countries that would feel a considerable impact of the planned tax.

“This week, a growing group of African, Caribbean, Pacific, Asian, Latin American, and European countries spoke out in support of a shipping levy that would deliver on the IMO’s unanimously adopted decarbonisation strategy. Such a levy would mean a major breakthrough for climate action,” Christiaan De Beukelaer, Senior Lecturer at the University of Melbourne, emphasized.

“However, countries that account for at least two thirds of fossil fuel subsidies continue to stand in the way of a shipping levy. This includes Brazil, who is touting to be a leader in hosting this year’s climate summit, yet just joined OPEC+, a group of major oil-exporting nations. These fossil fuel incumbents should not be allowed to block urgent climate action in the shipping industry.”

• ICS: Global GHG levy is the way forward for shipping’s net-zero aspirations
• Shipping industry calls for global GHG fee in new proposal
• MEPC 81: Lion’s share of countries throw support behind global GHG price for shipping
• Liner majors rally behind WSC’s GHG pricing mechanism
• ICS proposes 1st global carbon levy to speed up industry decarbonisation