Carbon Levy in Shipping: A Historic First Step — But Is It Enough?
Posted on Apr 27, 2025 at 08:04 PM
The International Maritime Organisation (IMO) is constantly planning, developing, and applying strategies to reduce emissions from the global shipping industry, protect the marine environment, and reduce climate change.
Furthermore, the Global Carbon Levy on Shipping was established and will be implemented in 2028 in all EU and global countries with a tax per carbon/tonne emissions to reduce carbon emissions without impacting global trading or oil and gas production.
Read more about the latest news of carbon levy in the shipping industry with information coming directly from the live April week meeting in the IMO 2025, after two weeks of negotiations and talks at the agency’s headquarters in London about the levy mechanism, provincial agreement, and economic strategy.
What Is Carbon Levy?
A carbon levy on the maritime and shipping industry is imposed tax or fee rules that apply to the use of fuels or activities that emit or include carbon dioxide into the atmosphere, and will be completely mandatory on all the target ships, islands, and countries in 2028.
Simply, the main goal of this tax or fuel emissions tool is to hold polluters financially accountable for their emissions with higher carbon pricing. Which in one way or another will encourage cleaner energy use and sustainable innovation leading to slowing down climate change, protecting fund and revenues, and boosting environmental plans.
Moreover, in the shipping sector, the proposed carbon levy regime charges vessels based on the carbon emission rate (per tonne basis) they produce during voyages, for the transportation of products or any other reason, pushing companies to adopt greener technologies, measures, and fuels in all industries.
The Impact of Carbon Levy on International Shipping:
To better clarify the impact of the carbon levy on shipping, let us discuss the short and long-term impacts of the levy on carbon produced by ships on local and international waters:
Short-term Impact of Carbon Levy:
The carbon price levy will immediately raise shipping and operating costs for maritime companies with high-emission fuels, which will, by default, increase freight charges on commercial companies, consumers, and supply chains.
Furthermore, global companies will need to invest and adopt new effective technologies and economic standards to lower emission rates and avoid carbon tax on national and global levels.
Long-term Impact of Carbon Levy:
Over time, the carbon levy or tax application is expected to encourage ambitious investment in cleaner fuel, more efficient vessels, and propulsion systems, in addition to a stronger push toward alternative fuels like LNG, green ammonia, or hydrogen.
Additionally, the long exposure to carbon emissions and submissions require a strong set of worker health protection outcome by each government.
Why Is the Carbon Levy Applied?
As we have strict universal maritime cybersecurity regulations to ensure data protection, the IMO is also applying the agreed-on carbon levy on maritime transport to reduce greenhouse gas emissions (GHG) and fight climate change offshore and onshore as well.
The carbon levy on shipping emissions encourages countries to shift toward cleaner, more sustainable energy sources by making pollution more costly which successfully supports global efforts, including the IMO’s decarbonisation goals for a greener maritime future.
What Are the Expected Key Benefits of the 2028 Carbon Levy?
Based on the maritime law courses in UK, the carbon levy on shipping emissions is expected to get back with great benefits to all countries involved in fuel usage, tax income, and marine safety:
Protect the Marine Environment:
The carbon levy or tax will lead to reduced emissions from ships, lower ocean acidification, and air pollution, and protect marine ecosystems with cleaner operations because shipping companies will try to reduce tax fees.
Boost Sustainability:
Sustainability is not an option anymore, and not because of all the applied regulations and taxes, but because it also helps make the work more cost-efficient. Thus, shipping companies are investing in energy-efficient vessels and low-emission fuels and technologies.
Encourage International Collaboration:
The global nature of shipping requires strong coordinated climate action between all involved countries, especially powerful countries like the UK, Canada, USA, China, and other nations, and the globally applied carbon levy creates a unified standard across borders. Which encourages countries and stakeholders to reduce taxes and achieve climate targets.
Provide Income for Green Projects:
Although companies do not like the intended carbon charge imposed on fuel emissions, we cannot ignore the promising revenue from the government's adoption of the carbon levy for the IMO. This will be effectively used to support major research, infrastructure, and renewable energy initiatives in all countries.
One final thought,
The carbon levy on shipping emissions is a great maritime law to reduce fuel emissions, improve maritime operations, and protect the environment.
However, to align your business with the global shipping and decarbonising regulations and levied standards and avoid penalties on the ship, you need to empower your maritime law.
