Barbados and other Caricom countries could be in rough waters with the United States (US) this week if they agree to adopt a global maritime agreement intended to reduce carbon emissions from ships.
The Donald Trump administration is threatening to take action, including visa restrictions, commercial penalties, higher port fees and other sanctions, against any nation which says yes to introducing the International Maritime Organisation’s (IMO) Net Zero Framework (NZF).
As the US government lambasts what it is calling the United Nations’ first global carbon tax, Caribbean private sector officials are warning that based solely on fuel price increases, the combined adjustment cost attributable to the NZF for Caribbean shipping could exceed US$750 million.
They say this cost will be compounded by the inflationary effects of the recent US reciprocal tariffs, and that the combined effect of these increases “will manifest in substantially higher consumer prices, with chain effects through the economy” in the Caribbean.
Informed sources revealed yesterday that following consultations with the regional private sector, the CARICOM Private Sector Organisation is recommending that the ten CARICOM member states eligible to vote at the IMO’s Marine Environment Protection Committee (MEPC) second extraordinary session to be held in London from Wednesday to Friday should try to postpone the vote.
This would be until the NZF, which would come into effect in January 2028, could be expanded and detailed in a way that fulfils the IMO’s 2023 Greenhouse Gas (GHG) Strategy.
Alternatively, one official said, the CPSO is advising that if CARICOM fails to get the vote delayed, Barbados and other nine member states eligible to vote should not support the NZF.
One Caribbean private representative said yesterday: “It’s a really big deal. We account for less than one per cent of global greenhouse gas emissions and maritime transport accounts for less than three per cent of global greenhouse gas emitting, but we will suffer the most severe impacts on prices, cost and economic adjustment.”
Reports indicate that some CARICOM Heads of Government discussed the NZF issue on Friday in the hope of reaching a consensus ahead of their delegations journeying to London for the IMO meeting.
That was the same day that US Secretary of State Marco Rubio, Secretary of Energy Chris Wright and Secretary of Transportation Sean Duffy issued a joint statement condemning the NZF and vowing to take action to “defend America”.
The NZF, which was agreed to at the last IMO MEPC meeting in April ahead of adoption, establishes a global system where ships must use cleaner fuels or technologies.
If their GHG fuel intensity is too high, they will pay a price corresponding to the greenhouse gases they emit above certain thresholds, what the US is calling a global carbon tax.
The NZF sets targets for ships exceeding 5 000 gross tonnes to reduce greenhouse gas emissions over time via fuel intensity standards and an economic mechanism that channels revenues into a NZF Fund.
The proposed system includes that ships with emissions above GHG fuel intensity targets would have to purchase “remedial units” of either US$100 per tonne of carbon dioxide equivalent (CO2eq) or US$380 per tonne of CO2eq.
A regional private sector official said that following consultations with the regional business community and a CPSO analysis, they concluded that “the cost and price impacts of the NZF will be significant to and have a disproportionate effect on CARICOM economies, with direct deleterious implications for the regional private sector and the people of [CARICOM]”. It was explained that based on actual and projected higher prices for liquefied natural gas and biofuel, one major shipping line that services CARICOM member states estimates that the adjustment cost attributable to the NZF between January 2028 and December 2030 would be between US$250 million and US$300 million, based only on fuel price appreciation. Others in the industry believe it could be higher.
Business sector representatives also pointed out that since the NZF framework does not exempt ships exceeding 5 000 gross tonnes engaged in short sea shipping between the US and Caribbean, this would be in conflict with the exemption the region received from the US planned action against China-made ships docking at American ports.
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