Pacific governments say an official UN report shows their push for a levy on all shipping emissions – with the revenues redistributed to poorer nations – is fairer, cheaper and more effective than other green options under consideration.
The report, overseen by a steering committee of 32 governments and published by the International Maritime Organisation (IMO), found that a levy would do less damage to the global economy than a standard for cleaner fuels and, if designed right, could help reduce global economic inequality.
Marshall Islands shipping negotiator Albon Ishoda said the analysis showed that a direct levy on emissions “is the fastest, cheapest and most equitable way” to decarbonise shipping, a sector that accounts for 3% of the world’s greenhouse gas pollution.
A levy would force ship owners to pay for every tonne of greenhouse gases their vessels emit, making the use of more-polluting fuels – like today’s oil-based bunker fuel – more expensive. It would incentive the use of lower-emitting fuels like ammonia, biofuels, methanol and hydrogen.
Ishoda said he now expects to see countries coalesce around an emissions levy, adding that “alternatives such as relying solely on a fuel standard could be up to twice as damaging for global GDP by 2050, with the poorest countries hit hardest”.
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But written comments on the UN Trade and Development (UNCTAD) report show that Brazil, Argentina and China disputed its findings. Latin American nations have long led opposition to an emissions levy, fearing it will harm their trade-dependent economies.
Argentinian officials noted that they were “surprised” at the conclusion that levies would lead to less economic damage in the long term while Brazil wrote that this was “nonsensical”.
Argentina said it was “policy-prescriptive and therefore unacceptable” for the report to suggest that disbursing the revenues would help developing countries more than developed ones, while China argued this aspect should not have been factored in as “the impact assessment should focus on the impact of the measure, rather than the impact after revenue distribution”.
Levy or fuel standard?
Governments have already agreed to put a price on shipping emissions as a way to reach net zero “by or around, i.e. close to 2050”. But they have not settled on exactly how to do that, instead tasking experts to study the impacts of various proposals.
One proposal – which most countries support – is a fuel standard that would see ship owners pay for emissions only above a certain level. Owners of ships emitting below this level could potentially sell licenses to those emitting above it, enabling them to continue polluting. This would incentivise shipowners to use cleaner fuels or to save fuel by sailing slower.
Some countries – like the Pacific island states and many European nations – want to combine this fuel standard with a levy, where ship owners would have to pay varying amounts based on their vessels’ total annual greenhouse gas emissions.
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Under the direction of governments, experts from UNCTAD, the World Maritime University, DNV and Starcrest Consulting Group produced four separate reports, modelling dozens of different scenarios.
UNCTAD found that any emissions-cutting scenario would push up the cost of shipping, damaging the global economy by around 0.1-0.2% by 2050. It did not model the economic benefits of how the measures would help curb climate change.
Comparing a levy to a fuel standard, the UNCTAD report concluded that “in the long run (2050), scenarios that envisage a levy have a smaller impact” on economic growth.
University College of London academic Tristan Smith, who worked on the paper, explained that the levies modelled lead to greater subsidies for zero-emission fuels and higher incentives for fuel efficiency than the proposed fuel standard. He told Climate Home that this lowers the cost of the transition and therefore the damage to economic growth.
Fairer and faster?
The report found that a fuel standard without a levy would damage the economies of developing countries – particularly small islands (SIDs) and least developed countries (LDCs) – more than developed countries because any increase in shipping costs hits the poorest hardest.
A high emissions levy of $150-300 per tonne of CO2 equivalent would be fairer, it found, broadly damaging developing countries’ economies less than developed ones, assuming that the revenues were distributed to poorer nations. Such a levy would actually boost the economies of most LDCs, it found, and damage SIDs less than the alternatives.
Consultants from Starcrest interviewed representatives of governments and business in various countries and heard concerns that economies exporting cheap, bulky goods over long distances would be badly hit by an increase in the cost of shipping. It cited Tonga’s exports of the medicinal kava plant and the US’s exports of wood chips as examples.
If green measures drive ships to slow down to save fuel, then countries that rely on exporting perishable goods to faraway destinations would suffer, Starcrest was told. Argentina’s beef and Chile’s cherry industries could be vulnerable.
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University of Sao Paulo economist Paula Pereda told Climate Home that a levy would “quickly reduce emissions”, but warned against its “potential regressive impacts, which more negatively affect poorer countries and poorer families in all countries”.
While revenue redistribution could help tackle this unfairness, it could also increase emissions from the compensated households and increase the complexity of the mechanism, she added.
“Balancing environmental benefits with social equity remains a key challenge in the implementation of carbon tax policies,” she said.
Governments will debate whether to pursue a levy or fuel standard at the next set of IMO talks in London, starting on September 30. They are aiming to have a measure in place by 2027, which means they will need to agree it at talks in April 2025.
(Reporting by Joe Lo; editing by Megan Rowling)
The post Key UN report lends weight to Pacific plan for shipping emissions levy appeared first on Climate Home News.
Key UN report lends weight to Pacific plan for shipping emissions levy
Climate Change
North Carolina Regulators Nix $1.2 Billion Federal Proposal to Dredge Wilmington Harbor
U.S. Army Corps of Engineers failed to explain how it would mitigate environmental harms, including PFAS contamination.
The U.S. Army Corps of Engineers can’t dredge 28 miles of the Wilmington Harbor as planned, after North Carolina environmental regulators determined the billion-dollar proposal would be inconsistent with the state’s coastal management policies.
North Carolina Regulators Nix $1.2 Billion Federal Proposal to Dredge Wilmington Harbor
Australia has some of the largest areas of high volume, consistent solar and wind energy anywhere in the world. It is a natural advantage that many countries in our region and across Europe will envy as they ramp up their efforts to reduce carbon pollution.
Australia has an amazing opportunity to utilise this abundance of reliable energy not only to transform our own energy systems but also that of our neighbours – if we get the policy settings right.
We are, in fact, already seeing the benefits of renewable energy flowing into our electricity grids. With all the inflation pressures on our bank accounts it looks like electricity pricing may be one cost that could be turning a corner – largely thanks to cheap solar and wind energy.
Renewables are Bringing Down the Cost of Producing Electricity
Here at Greenpeace, while we think there are some important questions to ask about renewable energy, it is clear that solar and wind are certainly the cheapest energy options available.
In contrast, coal, oil and gas are not only big on pollution, they are also proving costlier as they struggle to cope with the changing nature of our electricity systems. Plus, fossil fuels are much more exposed to international price fluctuations – as we all experienced when our electricity bills rapidly rose following the Russian invasion of Ukraine.
Wouldn’t it be great if we instead had energy independence, sourced from an infinite supply of clean energy?
Solar and wind (backed by batteries) can do just that and the reality is that they are already out-competing the old guard of gas and coal simply because they are quicker and cheaper to deploy. Which is good news for electricity prices!
Although whether energy retailers are passing on those savings to customers is another question. Short answer: no, they’re not – but it is a bit complex.
Why are my electricity bills still high?
There are a number of elements that make up the final amount we see on our bills. The graph below shows the breakdown of energy costs covered by our bills.
You will see roughly a third (36.2% in 2025-26) of the cost goes to maintenance and build out of the electricity grid. This includes the transmission lines needed to connect to new renewable energy sites and to connect states so they can better share their energy resources. The ‘network’ costs have been increasing but so have other components of our bill, most notably the ‘wholesale’ cost of producing electricity.
Thankfully, the cost of producing the electricity is now starting to go down (thanks to renewables and batteries), but they are coming off record highs thanks to the exorbitant cost of gas and the unreliability of coal power stations that are old and no longer fit for purpose.
During high demand times (eg, when we all get home from work on a hot day and turn on the air conditioning) spot prices can quickly jump. Add to that a couple of coal power plants breaking down (as they increasingly do), and expensive gas fired power use spikes in the system. This can quickly cancel out any of the cost savings solar power may have created during the day when prices can actually go negative.
The good news is that this is exactly the problem batteries can solve. Batteries are great at soaking up the surplus supply of solar during the middle of the day, which creates a more efficient system, and then rapidly pumping out that power during the evening peak at a cheaper rate than gas.
How much have costs come down?
According to the Australian energy regulator (AEMO), wholesale electricity prices across the east coast have dropped by 44% when comparing prices in quarter 4 of 2025 to the same period in 2024.
AEMO directly attributes the change to the significant growth in wind (up 29%), solar (up 15%), and batteries (3,796 MW of new battery capacity added). This influx of cheap renewable energy has seen a corresponding decrease in the use of polluting fossil fuels to power the grid. Coal fired power dropped by 4.6% and gas fired power fell by a staggering 27%.
The same trend can be seen in the world’s largest standalone grid in WA where renewable energy and storage supplied a record 52.4% of the grid’s energy across the final 3 months of 2025. That is an impressive result given there is no interstate connection to borrow energy from and there is no hydroelectric power in the system.
As a result, WA has seen a 13% drop in wholesale electricity prices thanks to a 5.8% reduction in coal fired power and a 16.4% reduction in gas fired power.
Australian Households Lead the Way on Solar and Batteries
Despite all the attempts to discredit clean energy by Trump and other conservative politicians, Aussie households have long known the value of renewable energy. In fact, Australia now holds the title for the highest rate of solar energy per capita in the world.
This is now being followed by the rapid takeup of household batteries with the Clean Energy Regulator being overwhelmed with interest in the Cheaper Home Batteries Program. They now expect to receive “around 175,000 valid battery applications corresponding to a total usable capacity of 3.9 GWh by the end of 2025.”’
All these extra batteries storing the surplus solar energy across our neighbourhoods during the day is not only creating drastic bill reductions for those households who are installing them, it is helping the whole grid. Which eventually will help everyone’s electricity bills.
If Australia as a whole follows the lead of suburban families by switching to cheap solar (plus wind) backed-up by batteries, it has an unparalleled opportunity to build its economy on the back of unlimited, local, clean energy harnessed from the sun and wind.
Powering our Future Economy
If there was ever something Australia has a natural advantage in, its sun and wind. But given the growing demand for electricity from data centres and the electrification of heavy industry, we are going to need more than just rooftop solar panels.
That’s where Australia has the potential, more than almost any other country, to become a renewable energy powerhouse and punch above our weight in the fight against climate change. See for example the unique opportunity to enter into the production and export of green iron.
While there is still quite a way to go before our electricity is fully sourced from solar and wind, we are well on the way. The clean energy charge is gathering pace – and our communities, oceans, wildlife and bank balances will be the better for it.
Climate Change
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Each spring, humpback whales start to feed off the coast of California and Oregon on dense schools of anchovies, sardines and krill—prey sustained by cool, nutrient-rich water that seasonal winds draw up from the deep ocean.
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