NEW DELHI: India joined 62 countries in agreeing to the world’s first-ever global carbon tax by bringing commercial shipping under this mechanism to tackle greenhouse gas emissions in the sector. Under the agreement, ship owners will need to use cleaner fuels or face fines beginning 2028.
Shipping accounts for 3% of global emissions. Since the sector is not covered under the Paris Agreement, the legally binding deal on imposing a carbon tax on shipping to tackle emissions marks a significant development towards the overall ‘net-zero’ goal.
The countries agreed on the framework after voting at UN’s International Maritime Organisation in London Friday. The agreement, reached after nearly 10 years of negotiations, aims to put a carbon price on shipping emissions. It is expected to help the sector decarbonise and encourage the use of cleaner technologies.
The pricing measures, set to be formally adopted in Oct, will become mandatory for large ocean-going ships of over 5,000 gross tonnage, which emit 85% of the total carbon dioxide emissions from international shipping.
Under the framework, if a ship continues to use conventional fuel in 2028 it would have to pay $100 to $380 per tonne of emission, depending on crossing the threshold of ‘base’ and ‘direct compliance’ targets. It is estimated that the tax could generate up to $40 billion by 2030. The funds will be used exclusively to decarbonise the shipping industry.
A total of 63 countries, including India, China, the EU, Norway, Singapore, South Africa and Japan, voted in favour of the agreement, while 16, including major oil-producing Saudi Arabia, UAE, Russia and Venezuela, voted against, and 25 countries, mostly small island nations abstained. The US delegation was not present at the time of voting.
