The International Maritime Organization on Friday approved the first-of-its-kind carbon tax on ship emissions, but one that falls short of a plan that threatened to substantially raise the cost of containerized imports, crude oil and other goods that move by sea.
The United States did not attend the meeting. The Trump administration earlier this week said it would retaliate with its own penalties or tariffs if U.S.-bound ships were subject to onerous carbon charges. There was no immediate reaction from the White House on passage of the carbon tax.
The vote by IMO members meeting in London came after opposition by a group of countries including China and Saudi Arabia weakened support for a high, flat levy of $150 per metric ton of carbon dioxide, particulates and other greenhouse gas emissions in favor of a combination of fees and credits that could be traded to help ships comply.
Formal adoption is scheduled for October.
Starting in 2028, a ship continuing to use conventional diesel fuel would have to pay a $380 fee per metric ton on its most intensive emissions and $100 per metric ton on remaining emissions above a lower threshold.
The compromise is expected to raise $30-40 billion by 2030, and is expected to fund clean energy technology on ships.
Opponents claimed the original tax proposal could potentially double the cost of ships’ diesel fuel, with those increases eventually being passed on to consumers. That would especially hurt the U.S., the world’s largest market for container imports.
The plan, which had been backed by the Biden administration, targets zero vessel emissions by 2050 by pushing ship operators to use fuels that produce less greenhouse gases such as ammonia, hydrogen or liquefied natural gas. Proponents said that ships emissions disproportionately effect smaller countries.
“This is a major milestone for climate policy and a turning point for shipping,” said World Shipping Council President and Chief Executive Joe Kramek, in a statement. “Liner shipping has already moved to kick-start decarbonization, with nearly 1000 renewable-capable ships set to be on the water by 2030. However, a global regulation is necessary to deliver the renewable fuels at a commercially viable price.”
The agreement will achieve only 8% absolute emission reduction by 2030, according to consultant UMAS, falling short of the IMO’s own goals of 20% to 30% emission reduction by 2030.
Find more articles by Stuart Chirls here.
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