This Note provides contextual information on the development of mid- and long-term GHG measures under the International Maritime Organisation towards international shipping decarbonization, and focuses on equity issues in carbon pricing and revenues recycling of a potential GHG levy.

Key Messages

  • A GHG levy is feasible through an amendment to the International Convention for the Prevention of Pollution from Ships (MARPOL) under the IMO, and could be paid at the same time as the ship’s fuel, without passing through countries’ budgets.
  • Several countries and the shipping industry submitted technical proposals for a levy, suggesting its revenues could be partly used for the decarbonization of the shipping sector, and partly to support developing countries’ climate action. Designing who pays and who receives the proceeds of a potential levy has important equity implications, as some countries particularly depend of the maritime sector for trade or livelihoods.
  • The levy could have both a uniform application to all ships, and a differentiated redistribution of proceeds according to objective evidence, in line with the IMO’s principles of ‘no more favorable treatment’ (NMFT) and the need to avoid ‘disproportionately negative impacts’ (DNI). Least Developed Countries and Small Island Developing States are most vulnerable both to the economic impacts of decarbonization and to the physical impacts of climate change.
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