China's Opposition to Carbon Levy Sets Stage for Tense IMO Talks

China, South Africa and Brazil are expected to hold firm against a carbon levy at the IMO meetings. Image Credit: Ship & Bunker

With just days before the IMO meets to finalise mid-term measures for reducing shipping's GHG emissions, all eyes are on China.

More than 60 countries, including those from Europe, Africa, Asia, the Pacific and the Caribbean, are backing a carbon levy of $18-150 per metric ton of CO2 equivalent.

However, China, along with Brazil and South Africa, remains a key opponent, favouring a weaker, credit-based system.

These countries support alternatives like the International Maritime Sustainable Fuels and Fund (IMSF&F) or the J9 proposal put forward by Singapore to bridge the gap, which offers a carbon credit trading model instead of a fixed levy.

J9 allows ships to offset emissions by purchasing credits and introduces a tiered fuel taxation system, where cleaner fuels face lower charges. While part of the funds would support industry-wide decarbonisation, critics argue the proposal lacks transparency and could favour wealthier shipping nations.

A new report from UCL's Energy Institute Shipping and Oceans Research Group suggests that the IMSF&F will be insufficient to meet shipping's climate targets.

"The IMO is at a crossroads: next week and in early April, governments must come together and agree on measures that can help drive the transition to zero-emission fuels and technologies and reach the IMO GHG Strategy objectives," Bastien Bonnet-Cantalloube, expert at Carbon Market Watch, said

The IMO's MEPC meeting is scheduled for April 7-11, where member states are expected to finalise mid-term measures for GHG reductions. These measures may include a technical element like a global fuel standard and an economic component such as a carbon levy.