by Lloyd's List
28 March 2025 (Lloyd's List) - THE European Union looks set to drop its support for a global carbon levy at the International Maritime Organization, in a blow to decarbonisation hopes.
Sources told Lloyd’s List the EU’s formal position ahead of crucial climate talks next week is still in favour of the levy proposal, which would be paired with a greenhouse gas fuel standard (GFS) to force a switch to green fuels.
But behind the scenes, European negotiators are talking about what numbers they could accept in talks over the J9 compromise plan, which relies on carbon trading instead of a levy to raise revenue.
“They’re preparing the ground to move next week,” a source close to the talks said, describing “the EU sitting down with China behind the scenes and Singapore acting as brokers”.
Levy supporters fear an EU rollback on support for an emissions levy could undermine the group of more than 50 countries and NGOs that support it.
Some criticised what they saw as the EU being too willing to concede to countries that oppose a levy, including China, Brazil, Saudi Arabia and big fossil fuel exporters.
A source called the EU’s about-turn a surprise, given how hard EU negotiators had worked since before the new year on the consolidated levy plan to make its various provisions acceptable to big flag states, such as Liberia.
“People would be genuinely surprised if the intention was never to go ahead with that,” the source said.
Policy wonks, commodity traders and big shipping companies have argued this week that a J9-style regulation would fail to raise enough cash to decarbonise shipping and compensate developing countries with the costs of climate change.
They argued this would stymie investment in green fuels and drive shipowners towards short-term fixes like biofuels and liquefied natural gas that were worse for the climate in the long run.
Research by the UCL Energy Institute released this week found such a policy would also increase upfront costs and help state-led economies such as China gain the upper hand in making future fuels.
Climate activists reacted with dismay to news of the European backdown, first reported by The Guardian.
Dr Peter Nuttall, who advises the IMO’s climate-ambitious Pacific Islands bloc on policy, was one.
“So sad, but totally unsurprising, that the EU decided to throw the climate vulnerable under a bus and backtrack on their commitment to a levy to appease China,” Nuttall said on LinkedIn.
IMO watchers are waiting to see which way undecided states from Africa and the Caribbean will turn at the discussions next week.
Another compromise proposal, by the International Chamber of Shipping, has sought to tighten the stringency of the credit-trading options on the table, but has so far failed to make much of a splash.
The IMO is due to approve mid-term measures at MEPC83, which runs from April 7-11. The measures approved would be adopted in October and enter force from 2027-28.
