IMO Green Tax for Net Zero Shipping by 2050: The Best Option for India

Introduction
The International Maritime Organization (IMO) has proposed a global carbon levy and a well-to-wake fuel standard to steer the shipping industry towards net zero emissions by 2050. While this initiative is commendable in its intent, its economic implications vary across countries. For India, a developing maritime nation with significant seaborne trade dependence, the impact could be substantial. This blog explores the potential consequences of the IMO Green Tax on India and presents an alternative model that balances environmental responsibility with economic fairness.

1. The Current Scenario

In 2024, India’s shipping freight earnings were estimated at approximately $35 billion. On average, bunker fuel accounts for 50% of ship operating costs. Assuming ships operate at break-even, bunker costs for carrying India’s seaborne trade would be around $17.25 billion.

2. Impact of IMO’s $100/tonne CO₂ Levy

The proposed $100/tonne CO₂ levy, coupled with a well-to-wake fuel standard, could increase global shipping costs by 28% by 2030. Translating this to India, the additional cost on bunker fuel would be approximately $4.83 billion annually, assuming the entire cost is passed on to end users. This directly increases the freight cost burden on Indian trade.