Bastien Bonnet-Cantalloube
Author’s bio: Bastien Bonnet-Cantalloube is an Expert on Decarbonisation of Aviation and Shipping at Carbon Market Watch
With the growing momentum for the adoption of a global carbon levy on international shipping this year, the European Union’s proposal must go stronger on justice and equity.
With a final round of negotiations at the International Maritime Organisation (IMO) coming up in April 2025 at the Marine Environment Protection Committee’s 83rd session (MEPC 83), it is welcome to see an increasing number of countries joining forces around one single text for a global maritime carbon levy.
The European Union (EU) has been a key proponent of these proposals and is spearheading carbon pricing for the shipping sector domestically through the recent inclusion of maritime greenhouse gas emissions in the EU’s carbon markets. In order to broker a meaningful deal at the IMO, the EU cannot start negotiations by caving in to opponents of the levy and adding to the criticism that the Global North escapes its responsibility in climate financing. On the contrary, it must uphold a fairer transition for vulnerable countries. In parallel, major developing countries must finally embrace the benefits of a global maritime carbon levy that the rest of the world already sees.
Not in the same boat
The EU has long been a relative frontrunner in climate policy, often setting ambitious goals for reducing emissions. At the IMO, the EU’s proposal for a market-based measure (MBM) to reduce shipping emissions stands out as one of the more ambitious attempts to bring this highly polluting sector closer to global climate objectives. However, as highlighted in Carbon Market Watch’s recent scorecard, the proposal lacks a solid support framework and funding to help vulnerable countries develop research and innovation capacity and infrastructure for maritime transport.
Shipping emissions represent a significant challenge in global decarbonisation, accounting for nearly 3% of global greenhouse gas emissions. Market-based measures, such as emissions trading systems or carbon levies, can help tackle these emissions effectively by putting a price on carbon and by raising revenue that can be reinvested in decarbonising the sector and safeguarding a just and equitable transition.
The EU proposes to align international shipping with its regional carbon pricing efforts by imposing an effective levy on the sector’s emissions: €100 per tonne of greenhouse gas emissions (i.e. around 30% higher than the current price of the EU’s carbon market, the EU ETS, which started covering maritime emissions last year). It plans to use parts of these tax proceeds to fund the uptake of clean fuels, such as e-methanol or e-ammonia. Yet, its lack of meaningful support for least developed countries (LDCs) and small island developing states (SIDS) threatens both the fairness and global buy-in of the plan.
Many LDCs and SIDS depend heavily on shipping for trade and basic supplies, making them especially vulnerable to increased costs from carbon pricing. The discussion on the use of revenue generated by the economic measure is central in this respect. The EU’s proposal does not comply with the principles of the Clean Shipping Coalition for a fair economic measure, which states that to use revenue wisely, a measure must support countries most at risk from the impact of climate change and countries and workers most affected by the transition. In addition, it must invest in decarbonising the sector by supporting research and infrastructure development and roll-out.
Sink or swim
In the upcoming negotiations, the EU should take three critical steps in its positioning.
First, the EU should propose to open revenue use beyond the maritime sector and make it accessible to vulnerable countries. The EU’s current proposal to limit spending to only within the maritime sector threatens LDCs and SIDS’ capacity to address environmental protection, adapt and build up resilience to global heating, and respond to the impact of pollution from international shipping. In order to create a broad coalition in support of the carbon levy, the EU must uphold a position that effectively supports a just and equitable transition, as it claims it does. Without robust safeguards, this economic measure risks exacerbating existing inequalities, where wealthier nations drive policy but leave vulnerable countries to bear disproportionate burdens.
The first point implies that, secondly, the EU should propose to allocate a greater portion of the revenue to support vulnerable countries. This should be directed to LDCs and SIDS, which – according to UNCTAD’s Comprehensive Impact Assessment – will be the most affected. These funds could help build resilience in their shipping sectors, develop alternative fuels, and support broader climate adaptation initiatives. The EU’s proposal must recognise the unique challenges faced by developing countries. Creating technical assistance programmes and fostering knowledge-sharing partnerships could ensure that vulnerable nations can adapt to and benefit from the global shift towards climate-friendly shipping.
Finally, the EU should not delay the discussion on revenue use and ensure transparent and equitable redistribution mechanisms. Certainty on revenue distribution is a crucial prerequisite for the approval of the economic measure in April at the MEPC 83. Postponing an agreement on revenue use will harm vulnerable countries and create an air of unnecessary uncertainty. So clear guidelines on how revenues will be distributed are essential. The EU should work closely with IMO member states to co-create mechanisms that prioritise equity and inclusivity, ensuring no country is left behind.
Climate leadership is not just about setting ambitious goals. It is also about ensuring the transition is fair and inclusive. The new European Commission college has an opportunity to champion equity in international shipping decarbonisation. By addressing the gaps in its current proposal, the EU can bolster trust, foster global cooperation, and set a standard for climate policy that prioritises both environmental and social justice.
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