UN agrees first-ever global carbon tax on a polluter, but deal fails to address climate finance needs for developing countries

Diplomats at the UN’s International Maritime Organization (IMO) have agreed to the world’s first-ever carbon pricing mechanism applied to a major polluting industry – global shipping.

 

On Friday, 11 April, at IMO headquarters in London, countries voted during the closing plenary to adopt a global framework that will put a carbon price on shipping emissions that will help the industry decarbonise and encourage the use of cleaner technologies.

 

The overall policy is expected to be formally adopted in October 2025, though several technical details remain unresolved.

 

The tax will generate $30–40 billion – about $10 billion annually – in revenues by 2030. The agreement is projected to deliver at best 10% absolute emissions reduction in the shipping sector by 2030 – far short of the IMO’s own targets set in their 2023 revised strategy, which calls for at least a 20% cut by 2030, with a stretch goal of 30%.

 

The funds will be ring-fenced for decarbonizing the maritime sector alone and not go towards climate financing for developing countries. 

"In the end, the best possible outcome was achieved. The shipping industry has taken the lead in showing other hard-to-abate sectors that climate action is possible. African delegations must be commended, including Kenya, Namibia, Senegal, South Africa, and others who rose to the occasion and supported the compromise,” said Maria Ogbugo, Senior Associate, African Future Policies Hub. “Now that the IMO has agreed on measures that would apply on a global level, it is key that the various regional emissions schemes start seriously considering pulling back on their unilateral measures to avoid multiplicity of schemes piling up layer after layer of costs on African consumers."

 

Starting in 2028, ships will be required either to transition to lower-carbon fuel mixes or pay for the excess emissions they generate. Vessels that continue to burn conventional fossil fuels will face a $380 per tonne fee on the most intensive portion of their emissions, and $100 per tonne on remaining emissions above a certain threshold.

 

The policy, backed by 63 countries including Brazil, China, the EU, South Africa, Kenya, Senegal and Namibia, sets a global precedent: Despite objections from petro-states like Saudi Arabia, the UAE, Russia, and Venezuela – who opposed both the substance and the procedure of the agreement – Norway's compromise proposal, as the Chair of the IMO, passed in the final vote.

 

At UN climate talks in Baku in November 2024, countries agreed to a post-2025 $1.3 trillion climate finance deal to support developing countries in the energy transition. Countries are looking to public, private and innovative sources of finance to close the climate finance gap. 

 

Minister Antony Derjacques of the Seychelles said: “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?”

 

The carbon pricing mechanism, based on emissions intensity, will initially allow the use of fossil liquefied natural gas (LNG).

 

However, the regulation will progressively penalize the use of gas by the shipping industry.