In a significant step toward worldwide climate policy reform, India has joined 62 other nations in supporting the world's first-ever global carbon tax specifically targeting the shipping industry. This landmark decision was adopted by the United Nations' shipping agency, the International Maritime Organization (IMO), during a session held in London on Friday, as reported by PTI. The measure, which was ratified after a week filled with intense negotiations, aims to significantly reduce greenhouse gas emissions from maritime activities and accelerate the transition to cleaner technologies in the shipping sector.

The carbon tax is set to take effect in 2028, marking a historic moment as it will be the first time a global carbon pricing mechanism is imposed on an entire industry. Under this new framework, ships will be required to either transition to low-emission fuels or pay a fee that correlates with the level of pollution they produce. Estimates suggest that the implementation of this tax could generate as much as USD 40 billion by the year 2030, which would be a considerable amount that could help facilitate greener technologies in maritime operations.

While many hail this agreement as a vital advancement for global climate policy, it has not been without its criticisms. There are concerns regarding its ability to meet the climate finance needs of developing and vulnerable nations. Notably, the funds raised from this tax will be exclusively dedicated to decarbonizing the shipping sector and will not contribute to broader climate adaptation efforts or address loss and damage associated with climate change.

The pricing mechanism laid out in the agreement is projected to result in a reduction of shipping emissions by only 10% by 2030, a figure significantly below the IMOs own target of at least 20%. This discrepancy raises questions about the effectiveness of the newly adopted measures.

India, alongside China, Brazil, and a coalition of 60 other nations, voted in favor of the carbon tax initiative. However, several oil-rich countriessuch as Saudi Arabia, the United Arab Emirates, Russia, and Venezuelaexpressed their opposition to this move. Interestingly, the United States delegation did not participate in the negotiations and was notably absent during the final vote.

A coalition of over 60 countries, predominantly from the Pacific, Caribbean, Africa, and Central America, had advocated for a portion of the revenue generated from the tax to be allocated towards broader climate finance needs. Many of these nations are highly vulnerable to the impacts of climate change, including rising sea levels and increasingly extreme weather events. Their representatives voiced disappointment with the outcome of the negotiations, emphasizing the need for greater support in addressing their unique challenges.

Tuvalu's representative, speaking on behalf of the Pacific Island nations, criticized the lack of transparency during the discussions and asserted that the new framework does not adequately incentivize a transition to cleaner fuels. Vanuatus Minister for Climate Change, Ralph Regenvanu, went further, accusing fossil fuel-producing countries, including Saudi Arabia and the United States, of obstructing stronger measures that could align the shipping industry with the 1.5C temperature limit set forth in the Paris Agreement.

Under the newly adopted system, ship operators will be taxed based on the intensity of their emissions. Starting in 2028, vessels that continue to use traditional fuels will pay USD 380 per tonne for the most polluting emissions and USD 100 per tonne for emissions that exceed established thresholds. The tax will be phased in gradually, progressively discouraging the continued use of fossil fuels, including liquefied natural gas.

While the general framework for this policy has been agreed upon, several technical detailssuch as the final structure for revenue use and distributionare still pending. The policy is anticipated to be formally adopted in October 2025, as noted by PTI. Environmental advocates and representatives from smaller nations have pledged to persist in their efforts to push for a more equitable and ambitious framework that addresses the climate crisis more comprehensively.

Laurence Tubiana, CEO of the European Climate Foundation and a pivotal figure behind the Paris Agreement, welcomed the IMOs decision as a positive step forward. Polluters must pay for the damage they cause to the climate, she stated, though she also labeled the agreement as inadequate due to the absence of a dedicated shipping levy. Tubiana remarked, This was a missed opportunity, highlighting the growing global consensus on the necessity of taxing high-polluting sectors and the ultra-wealthy.