Recently, there’s been a push from unelected officials at the United Nations to reshape the global economy supposedly to combat climate change. In October, the International Maritime Organization (IMO), a UN agency, considered implementing a carbon tax aimed at reducing emissions from transport vessels. This follows their earlier decision to adopt net-zero shipping regulations by April 2025.
If the IMO had moved forward with these proposals, we might have seen the start of a global tax on greenhouse gas emissions. Fortunately, the United States managed to halt these proposals for the moment. But even with these regulations paused, support for the core ideas behind them seems to be growing.
Advocates for carbon taxes argue that drastic measures are needed across all areas of life to address the looming costs of climate change. They suggest eating less meat and opting for public transportation more often. Politically, they push to vote out those labeled as “climate deniers.” Economically, carbon taxes are presented as a quick fix for carbon emissions. But is that really the right approach? In terms of tackling climate change, many experts would argue otherwise.
It’s important to note that carbon taxes are not purely science-based. All models rely on certain assumptions which ultimately influence the analysis. The time frame chosen for evaluation and the discount rates applied can impact the outcomes significantly.
This leads to differing estimates of the social cost of carbon, even among economists who agree on the baseline facts. When these assumptions vary, they aren’t scientific certainties. As pointed out, the carbon pricing model often serves as much as a political tool as it does an economic mechanism. We should also question whether the carbon tax will stay the same or gradually increase to push forward various political agendas. It seems likely that we would see it rise.
Moreover, since these models hinge on assumptions, it leaves many wondering who would impose such taxes. The answer would largely be the unelected bureaucrats at the IMO. The people who would be paying these taxes never actually voted for those creating the regulations. “No taxation without representation,” comes to mind.
Interestingly, imposing a carbon tax on global shipping could backfire when it comes to reducing emissions. After all, trade tends to enrich nations, not just the wealthy, but also the poorer countries can benefit significantly. In affluent nations, trade can stimulate innovation and adaptation to climate challenges, while in poorer ones, the material benefits from trade can help alleviate starvation and support national growth.
The main advantage of trade is its potential to elevate a country from poverty—where high levels of pollution might be a survival strategy—to wealth, where pollution control becomes feasible. But if carbon taxes are too high, they could stifle this progress, which seems counterproductive. As it stands, shipping contributes to around 3% of global emissions.
Unchecked, the same innovation that brought us modern shipping can continue powering the global economy and fostering growth. The world doesn’t need extensive bureaucracies to signal moral choice; rather, we should foster an understanding of economics and human advancement.
History tells us that prosperity, innovation, and free trade tend to create cleaner, healthier, and wealthier societies. The real decision we face isn’t whether to save the planet or the economy; it’s about choosing between a society with free markets or relinquishing authority to unelected international bodies. The former has lifted billions from poverty, while the latter could hinder our progress.
