FIRST GLOBAL TAX ON GHG EMISSIONS

THE International Maritime Organisation (IMO) on Friday finalised a $100 per tonne carbon tax on ship emissions, set to take effect in 2028.

- S V Krishna Chaitanya

This levy, applied to nations failing to meet contributions to the IMO's net-zero fund or compliance targets, marks the first global tax on greenhouse gas (GHG) emissions.

Coupled with a new marine fuel standard to phase in cleaner alternatives, the decision aims to curb the maritime sector's 3% share of global emissions, as reported by the United Nations. Yet, with the United States absent from the talks and environmentalists divided, questions linger: Is this a transformative leap toward the IMO's net-zero 2050 goal, or a compromise that falls short of the climate crisis's demands?

Maritime shipping, the backbone of global trade, moves roughly 12 billion tons of cargo annually, as per United Nations Trade and Development (UNCTAD) 2023 report. Despite a 0.4% dip in seaborne trade in 2022, the sector is projected to grow 2.1-2.2% yearly through 2028, driven by rebounding containerised trade (up over 3% annually from 2024) and surging oil and gas shipments (6% and 4.6% growth in 2022). This growth fuels a troubling trend: shipping emissions have climbed over the past decade, reaching about 1 billion metric tonnes of CO2 equivalent annually—3% of global GHG output. Larger vessels, carrying more cargo per trip, burn immense amounts of heavy fuel oil, with Panama, Liberia, and the Marshall Islands—holding over a third of global tonnage—leading the emissions tally.