US “bullying” over a proposed carbon levy on shipping appears to be paying off, experts have said, after Panama reversed its support for the measure.
In a leaked document seen by the Guardian, the key maritime state has co-sponsored a proposal to the International Maritime Organization that would in effect cancel the carbon levy and undermine attempts to cut greenhouse gas emissions.
The shipping industry accounts for about 3% of the world’s carbon output, a proportion likely to rise without a move to green technologies.
Scores of developing countries have been the target of “unprecedented” bullying from the US over the issue – behaviour that one expert has called “thuggery”.
Panama’s leaders are thought to feel particularly vulnerable. Home to a canal used by about 5% of global shipping every year, the country has been touted by Donald Trump as a possible annexation target, along with Canada and Greenland.
Panama is smaller and more vulnerable than the other two and its government is said to have been alarmed by the US president’s decision to order an armed intervention in Venezuela in early January.
Many countries, including the UK, are still united behind the carbon levy, which would be the first time ships were charged for their emissions.
Although amounting to only a small levy on individual vessels and cargoes, it could raise billions of dollars a year for climate action. It has been years in the making and was agreed at an IMO meeting last April, despite opposition from Saudi Arabia and some other petrostates and their allies.
But as the levy looked set to be enshrined in regulation, the US, which had walked out of the IMO negotiations, began phoning, emailing and publicly threatening small countries with reprisals if they supported the measure. At a follow-up meeting in October, enough countries switched or abstained to allow a one-year postponement of the levy.
The fight is now on to keep the proposal alive as well as the underlying commitments to cut greenhouse gas emissions that were passed by the IMO in 2023. The UN body is not scheduled to formally decide the future of the levy until October, but meetings in April are likely to result in heated discussions.
Panama’s switch is backed by Argentina and by Liberia, which has one of the world’s biggest shipping registries. Greece is now embarking on a partnership with Saudi Arabia to develop energy and communications cables, which is seen as a quid pro quo for opposing the carbon levy. Cyprus has also withdrawn its support.
The Guardian understands that the government of the Marshall Islands, a Pacific state with a strong record on pushing for climate action, is unlikely to back proposals for strengthening climate commitments at the IMO.
Insiders said they feared that the IMO’s secretary general, Arsenio Dominguez, who has been studiously neutral in his public stance, has been leaning in private toward the US position.
Panama’s latest proposals are contained in a paper submitted to the IMO and seen by the Guardian. Dated 20 February, the measures are presented by Liberia and co-sponsored by Panama and Argentina, which also operates key ports.
Although the document purports to support the regulation of shipping emissions, it would put back attempts to do so by requiring the renegotiation of years of painstaking progress on the issue.
One expert said it would “lock in” liquefied fossil gas for shipping, rather than cleaner choices such as hydrogen. Another said the paper was clear evidence that Washington’s bullying tactics were working. Representatives of several countries said they feared the same.
If the proposals from Panama, Liberia and Argentina are accepted, the carbon levy will disappear and, with it, any funds to help developing nations.
John Maggs of the Clean Shipping Coalition, a campaigning group, said: “The net zero framework [which underlies the carbon levy] may not be perfect, but it has the potential to grow into a set of rules that would allow the IMO and shipping industry to meet their climate and environmental justice commitments.
“By deprioritising environmental integrity and removing the fund that would have addressed any disproportionate negative impact on developing states, this new proposal completely abandons those commitments.”
An IMO spokesperson told the Guardian: “IMO continues to provide a platform for conversations between member states, who are also submitting proposals to be considered at forthcoming meetings. These discussions include efforts to find consensus on the pathway to the decarbonisation of international shipping.
“The next meeting of the marine environment protection committee in April 2026 will allow member states to continue discussing outstanding concerns, listen to everyone and consider the next steps.”
