India votes in favour of first global carbon tax on shipping

New Delhi: India and 62 other countries voted in favour of the world's first-ever global carbon tax imposed on the shipping industry by the United Nations' shipping agency.

The decision, taken at the International Maritime Organisation (IMO) headquarters in London on Friday after a week of intense negotiations, aims to reduce greenhouse gas emissions from ships and promote cleaner technologies.

The move marks the first time a global carbon tax has been imposed on an entire industry. Starting 2028, ships will either have to shift to lower-emission fuels or pay a fee for the pollution they generate.

The tax could generate up to Rs 3,44,386 crore ($40 billion) by 2030.

While the agreement is being seen as a breakthrough for international climate policy, it has also drawn criticism for failing to address the climate finance needs of developing countries.

All revenues raised from the carbon tax will be ring fenced for decarbonising the maritime sector and will not be allocated to broader climate finance efforts, such as helping countries adapt to climate change or recover from its impacts.

Also, carbon pricing is expected to reduce shipping emissions by only 10 per cent by 2030, far short of the IMO's own target of at least 20 per cent.

The deal was supported by 63 countries, including India, China and Brazil, but opposed by oil-rich nations like Saudi Arabia, the UAE, Russia and Venezuela. The US delegation did not participate in negotiations and was absent during voting.

A group of more than 60 countries, largely from the Pacific, Caribbean, Africa and Central America, had pushed for a share of the revenues to be directed towards broader climate finance needs.

These countries, many of them highly vulnerable to climate change, expressed disappointment at the final outcome.

Tuvalu, speaking on behalf of the Pacific Island nations, criticised the lack of transparency in the negotiations and said the current design fails to promote a real shift to cleaner fuels.

Vanuatu's Minister for Climate Change Ralph Regenvanu said countries like Saudi Arabia, the US and other fossil fuel producers had "blocked progress at every turn" and weakened proposals that could have aligned the shipping sector with the 1.5 degrees Celsius temperature limit under the Paris Agreement.

Under the mechanism, ships will be charged based on the intensity of their emissions.

For example, vessels using conventional fuel in 2028 would pay Rs 32,716 ($380) per tonne for the most polluting portion of their emissions and Rs 8,609 ($100) per tonne for other emissions that exceed defined thresholds.

This pricing system will be applied in stages and is designed to gradually penalise the use of fossil fuels, including liquefied natural gas.

Although the basic framework has been agreed, key technical details, including how the revenue will be used and distributed, are yet to be finalised. The policy is expected to be formally adopted in October 2025.

Environmental groups and negotiators from smaller countries have said they will continue to push for a more ambitious and equitable outcome that includes support for those most affected by the climate crisis.

Laurence Tubiana, CEO of the European Climate Foundation and one of the key architects of the Paris Agreement, said the IMO's decision to introduce a global carbon pricing system for shipping is a positive step because it recognises that polluters must pay for the damage they cause to the climate.

However, she called the agreement insufficient, especially as it does not include a proper shipping levy. "This was a missed opportunity," she said, adding that there is strong public support globally for taxing polluting industries and the super-rich.