The International Maritime Organization (IMO) held a meeting in London on Friday at which member nations agreed to impose the world’s first global carbon tax, a fee of $380 per metric ton on “greenhouse gases” emitted by ships up to a certain limit and $100 per ton beyond that.
The IMO estimated the new tax would bring about $10 billion per year into the organization’s “net zero fund” for green energy transitions. The limit on untaxed greenhouse gas emissions is scheduled to reduce over the years, beginning in 2027 and ending with “net zero” around 2050.
The IMO meeting also established an “emissions control area” in the northeastern Atlantic, where ships would be required to observe tougher regulations on carbon emissions. Most shipping traffic between the U.S. and Europe would pass through this control zone.
The carbon tax was a “consensus” agreement that did not seem to please anyone. Environmentalists predictably railed that the tax was too low, so shipping companies would be more likely to pay it than reduce their emissions dramatically. The more optimistic environmental groups hoped the relatively modest current tax would be a foot in the door for more draconian policies down the line.
“By approving a global fuel standard and greenhouse gas pricing mechanism, the International Maritime Organization took a crucial step to reduce climate impacts from shipping,” said Natacha Stamatiou of the Environmental Defense Fund.
“Member states must now deliver on strengthening the fuel standard over time to more effectively incentivize the sector’s adoption of zero and near-zero fuels, and to ensure a just and equitable energy transition,” Stamatiou said.
Developing nations, particularly island nations, argued the agreed-upon tax was too low to compensate them for the effects of climate change. A group of about 60 “developing” countries wanted the income from the carbon tax to go into a general climate fund, not a fund reserved solely for the shipping industry.
“The developing countries with the greatest need came here and offered a solution. How can the other major economies ask us to take a weak deal home to our people, who are suffering as a result of the climate crisis? And how can they take it back to their constituents?” said Minister Antony Derjacques of the Seychelles.
On the other hand, many of the major shipping nations objected to paying a carbon tax, instead pushing for a credit system that would let them do some trading to minimize the financial impact. Some form of carbon credit trading will evidently be part of the final agreement.
Oil-producing countries also objected to the global carbon tax agreement, including Saudi Arabia, the United Arab Emirates, Russia, and Venezuela.
Much of global trade is accomplished through maritime shipping, and those huge cargo ships are said to produce about three percent of the world’s industrial carbon emissions. A heavy tax on emissions would increase the price of virtually everything. Forcing cargo haulers to use the current generation of “green energy” technology would end worldwide commerce as we know it.
The United States was notably absent from the meeting, which the Trump administration dismissed as “blatantly unfair.”
“President Trump has made it clear that the U.S. will not accept any international environmental agreement that unduly or unfairly burdens the U.S. or the interest of the American people,” the administration said in a letter to the IMO on Wednesday.
“Accordingly, we must be clear the U.S. rejects any and all efforts to impose economic measures against its ships based on GHG emissions or fuel choice,” the letter said.
“Should such a blatantly unfair measure go forward, our government will consider reciprocal measures so as to offset any fees charged to U.S. ships and compensate the American people for any other economic harm from any adopted GHG emissions measures,” the letter threatened.
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