After a decade of discussions, member nations of the International Maritime Organization (IMO) have reached a pivotal agreement to implement the first global carbon fee for the shipping industry. This groundbreaking initiative establishes the first UN-administered carbon revenue system of its kind.
During the final day of the Marine Environment Protection Committee’s 83rd meeting, delegates established binding targets to reduce greenhouse gas emissions in shipping: a 20-30% reduction by 2030, 70-80% by 2040, and achieving net zero by around 2050.
This plan’s key components include a tiered fee system rather than a uniform carbon levy. Ships exceeding prescribed emissions intensity will incur a penalty of $380 per tonne of CO2, which will tighten over time. Ships that remain below this intensity will face a $100 per tonne fine for emissions exceeding a secondary compliance level. Those outperforming the requirements can earn tradable carbon credits.
Crucially, vessels under 5,000 gross tons, such as coastal ships and workboats, are exempt from these fees. The framework also encourages the use of alternative fuels meeting emissions standards, including first-generation biofuels, although they raise concerns related to environmental impacts.
Climate advocates have expressed mixed feelings about the agreement. While acknowledging it as a step in the right direction, they highlight that the fee structure may not compel a swift transition to higher-cost green fuels. Criticism has been directed at certain nations, such as Saudi Arabia and the United States, for allegedly weakening the proposed emission reduction targets.
Despite these concerns, industry leaders view the MEPC outcome as a foundational move towards sustainable shipping practices. “This is a major milestone for climate policy and a turning point for shipping,” said Joe Kramek, WSC President & CEO, emphasizing the potential for significant change with continued industry investment.
As we move forward, the focus will shift to how these new regulations are implemented and the global commitment required to meet these ambitious targets, defining the future landscape of the shipping industry.
Source: Transport & Environment (T&E)
