NEW ORLEANS – The International Maritime Organization (IMO), the United Nations’ specialized agency responsible for regulating international shipping, has agreed on a landmark measure to impose financial penalties on greenhouse gas (GHG) emissions from ships.
This initiative marks the first global tax on greenhouse gas emissions. By focusing on the shipping industry, the IMO aims to significantly reduce the industry’s carbon footprint.
“The industry fully supports the adoption by IMO of a GHG pricing mechanism for global application to shipping,” said Guy Platten, Secretary General of the International Chamber of Shipping (ICS).
Details of the IMO’s Decision
- Implementation Timeline: The agreed measures are set to take effect in 2027, with the first revenues from the carbon fees expected in 2028.
- Emission Reduction Targets: The IMO has established targets to reduce shipping’s carbon intensity by 40% by 2030 compared to 2008 levels, with further reductions leading to net-zero emissions by around 2050.
- Carbon Pricing Mechanism: Ships failing to meet these emission targets will be required to pay a fee for every tonne of CO₂ emitted above the established thresholds. The fee structure is designed to incentivize the adoption of cleaner fuels and technologies within the shipping industry. A tonne is 1,000 kilograms or 2,204 lbs. equivalent to 1.1 short tons.
- Revenue Generation and Allocation: The carbon pricing mechanism is expected to generate $11 to $13 billion annually, with funds going to support the development of low-carbon fuels and technologies and assist developing nations in transitioning to greener shipping practices. The system is also designed to reward vessels that achieve low emissions.
- Ships: The measure applies to all ships engaged in international trade, irrespective of their type. This includes cargo ships, cruise ships, tankers, and other vessel categories.
- Administration of the Fund: The IMO’s global carbon pricing mechanism will be administered by the IMO Net-Zero Fund.
Global Participation
Over half of the 176 IMO member states and three associate members participated in the vote, with 63 countries, including major shipping nations such as China, Brazil, South Africa, and numerous European countries, voting in favor of the agreement.
The historic decision was made in the IMO’s Marine Environment Protection Committee meeting after a decade of negotiations among the IMO members. The goal was to find a way to address the gap left by the 2015 Paris Agreement which did not establish measures to reduce the approximately 3% of global greenhouse gas emissions attributed to shipping.
However, 16 countries, including significant oil producers like Saudi Arabia, Russia, and the United Arab Emirates, voted against the measure.
Not Far Enough
IMO Secretary-General Arsenio Dominguez said the decision did not go far enough, stating that the organization has “made a historic decision, yet ultimately one that fails climate vulnerable countries and falls short of both the ambition the climate crisis demands and that member states committed to, just two years ago.”
Twenty-four nations, notably Pacific Island states, abstained from the vote, expressing concerns that the measures were insufficient to meet global decarbonization goals.
“We came as climate vulnerable countries—with the greatest need and the clearest solution. And what did we face? Weak alternatives from the world’s biggest economies—alternatives that won’t get us on a pathway to the 1.5°C temperature limit. They asked us to settle for less, while we are the ones losing the most. We will not negotiate away our future,” said Simon Kofe, Tuvalu’s Minister for Transport, Energy, Communication and Innovation.
United States’ Position
The United States notably withdrew from the IMO negotiations, with President Trump characterizing the proposed carbon levy as “blatantly unfair” and warned of potential retaliatory measures. The Trump administration argued that the levy could impose significant economic burdens and contribute to global inflation.
“President Trump has made it clear that the U.S. will not accept any international environmental agreement that unduly or unfairly burdens the U.S. or the interest of the American people,” the U.S. government conveyed in an official communication to the IMO.
Oversight
The IMO, as the governing body, will oversee the administration of the Net-Zero Fund. However, the IMO is considering collaborating with existing climate finance structures, such as the Green Climate Fund and the Adaptation Fund, to leverage their expertise and infrastructure in delivering funds effectively to regions and communities most in need.
About IMO
IMO – the International Maritime Organization – is the United Nations specialized agency with responsibility for the safety and security of shipping and the prevention of marine and atmospheric pollution by ships. IMO’s work supports the UN Sustainable Development Goals (SDGs), a set of 17 interconnected objectives established in 2015 to address global challenges and promote prosperity while protecting the planet.
As a specialized agency of the United Nations, IMO is the global standard-setting authority for the safety, security and environmental performance of international shipping. Its main role is to create a regulatory framework for the shipping industry that is fair and effective, universally adopted and universally implemented.
