India and 62 other countries adopt world's first-ever global carbon tax on shipping - What is it and why is it important?

In a landmark decision, India joined 62 other countries in voting in favour of the world's first-ever global carbon tax on the shipping industry.

The decision was made during a recent meeting of the United Nations' International Maritime Organisation (IMO), where countries voted to move forward with the world's first global carbon pricing system for the shipping industry.

The measure passed after a week of intense negotiations at the IMO. According to a PTI report, the tax is expected to be formally adopted in October 2025.

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While India and 62 other nations voted in favour of the deal, several rich-oil nations including Saudi Arabia, the UAE, Russia, and Venezuela opposed the move.

With the new framework, ships will either have to switch to low-emission fuels or pay a fee based on the level of pollution they produce.

What is a global shipping tax?

A global shipping tax is levied on emissions from the shipping industry, aiming to reduce greenhouse gas pollution from ships.

It is specifically a carbon tax and can incentivise the adoption of cleaner technologies and fuels in the shipping sector, aligning it with global climate goals.

The tax on shipping would require ship owners to pay for the carbon emissions produced by their vessels.

Why is it important?

Today, most ships run on heavy fuel oil, releasing carbon dioxide and other pollutants as it's burned.

The IMO set a target for the sector to reach net-zero greenhouse gas emissions by about 2050 and committed to ensure that fuels with zero or near-zero emissions are used more widely.

However, the pricing mechanism is expected to reduce shipping emissions by just 10% by 2030, which is well below the IMO's own target of at least 20%.

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Laurence Tubiana, CEO of the European Climate Foundation and one of the key architects of the Paris Agreement, said the IMO's decision to introduce a global carbon pricing system for shipping is a positive step because it recognises that polluters must pay for the damage they cause to the climate.

She, however, called the agreement "insufficient", especially as it does not include a proper shipping levy.

"This was a missed opportunity," she said, adding that there is strong public support globally for taxing polluting industries and the super-rich.

(With inputs from agencies)