Efforts are underway by nations around the world to institute a fee for emissions from commercial vessels, effectively creating the first global carbon tax. The International Maritime Organization (IMO), which oversees the regulation of international shipping, has set ambitious goals for the sector to achieve net-zero greenhouse gas emissions by 2050. Additionally, it pledged to promote the use of fuels that result in zero or near-zero emissions. The Marine Environment Protection Committee, a body under the IMO, is convening in London to discuss these issues from Monday to Friday.
The committee, made up of representatives from IMO member states, is seeking to approve new global regulations that would impose a financial cost on maritime greenhouse gas emissions and establish a marine fuel standard to progressively introduce cleaner fuels. According to IMO Secretary-General Arsenio Dominguez, these measures will be mandatory for ships operating globally. He emphasized that the industry must intensify its efforts to cut carbon emissions, stating that the committee’s work will set a path towards a net-zero future for maritime transport.
The outcome of these talks is crucial for the future of clean shipping, noted Emma Fenton, a senior director for climate diplomacy at Opportunity Green, a climate change nonprofit based in the U.K. Fenton argued that a straightforward flat-rate levy on shipping emissions, set at a high enough price, is essential for equitable decarbonization of the industry. She expressed hope that reaching an agreement would mark a significant step forward in tackling climate change on a global scale, offering an effective international framework for emissions reductions, which have predominantly been handled at the national level.
Shipping emissions have been on the rise over the last decade, now accounting for about 3% of global emissions as vessels have become larger, carrying more cargo per trip and consuming significant quantities of fuel oil. While maritime nations agreed in 2023 to cut these emissions, the deal faced criticism for not committing to a firm target date of 2050. The IMO is now working to implement regulations to meet the objectives outlined in the 2023 agreement.
Pairing a climate levy with a green fuel standard could help close the price gap between fossil fuels and green alternatives such as hydrogen, methanol, and ammonia, according to the Global Maritime Forum, which collaborates closely with the industry. Shipping remains heavily reliant on fossil fuels, and industry experts like Jesse Fahnestock of the forum emphasize that the sector won’t transition away from them without deliberate action. He noted the importance of investing now to develop an adequate supply of e-fuels derived from renewable electricity.
Most ships currently operate on heavy fuel oil, which releases carbon dioxide and other pollutants when burned. Dominguez of the IMO has highlighted that substantial decarbonization will necessitate a comprehensive overhaul of shipping fuels. The Clean Shipping Coalition is urging governments to commit to a high price on all ship emissions and adopt a robust fuel standard. This alliance of environmental non-profits is also calling for revisions to IMO’s method of calculating a ship’s carbon intensity to transparently enhance efficiency and reduce long-term fuel consumption.
Leading the charge are Pacific island nations, with over 60 countries backing a flat levy per metric ton of emissions to achieve net-zero in a fair manner. The shipping industry itself, represented by the International Chamber of Shipping, supports the implementation of a fee. Guy Platten, the Chamber’s secretary general, described a pricing mechanism for maritime emissions as a practical solution to encourage a prompt transition to cleaner energy sources across the shipping sector.
However, some countries, including China, Brazil, Saudi Arabia, and South Africa, prefer a credit trading model over a fixed levy. This model would allow ships operating below their emission targets to earn credits, which those exceeding the limits could purchase. Other nations are advocating for a compromise between these two approaches. Critics fear that without a universal levy, wealthier shipowners may simply purchase compliance, undermining climate goals. Ambassador Albon Ishoda from the Marshall Islands warned that IMO’s climate targets would be ineffective without a levy, noting that the revenue could support developing countries in transitioning to greener shipping practices.
If the IMO committee reaches an agreement and finalizes the text for the new regulations, they could be formally adopted by October, potentially taking effect in 2027. This would signify a robust commitment to a green transition for the industry globally, according to the IMO.