The global maritime industry has agreed to implement the world’s first international carbon pricing system – a historic milestone in climate action, but one that many experts and activists say lacks sufficient ambition to meet critical climate goals.
The agreement was reached last Friday at the International Maritime Organisation (IMO) in London, after a week of negotiations that exposed deep divisions between countries.
It creates a fuel carbon intensity standard backed by a levy system that will charge shipping companies for greenhouse gas emissions based on their carbon content.
From 2028, the world’s roughly 100,000 commercial vessels will have to switch to cleaner fuels or pay a fee for the pollution they produce.
Supporters call the deal a diplomatic breakthrough. Critics say it won’t deliver the urgent cuts needed to slow global warming.
Under the IMO’s current climate strategy, the maritime sector – responsible for 3 percent of global emissions – must reach carbon neutrality within 25 years.
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Geopolitical divide
“A victory for multilateralism, a failure for the climate,” said the NGO Transport and Environment after assessing the text approved by the IMO’s Marine Environment Protection Committee.
The 83rd session of the committee ended with a compromise deal that failed to win full consensus – the usual practice in such diplomatic forums.
Instead, 63 countries voted in favour, including the European Union, China, India, Japan, South Korea, Singapore and Norway.
Sixteen voted against. Among them were Saudi Arabia, Venezuela, the United Arab Emirates and Russia. Another 25 countries abstained, including several island states from the Pacific and Caribbean, as well as Argentina.
Many of those island nations have been vocal throughout the negotiations. They say the agreement falls short of what’s needed to protect countries most exposed to rising sea levels and extreme weather.
NGOs from the Clean Shipping Coalition also criticised the outcome, accusing the IMO of “failing to meet the UN body’s climate objectives for 2030, 2040 and 2050 and for failing to address the needs of populations and regions most vulnerable to climate change”.
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Carbon pricing
The agreement introduces a global standard for the carbon intensity of fuels used in shipping. It sets two emissions targets: a baseline that is relatively easy to meet, and a more ambitious target aimed at encouraging the use of cleaner fuels.
Ships that fall short of these targets will pay a penalty. Those that fail to meet the baseline will pay up to $380 per tonne of CO2 emitted. Vessels that meet the baseline but miss the higher target will be charged a lower rate of $100 per tonne. Both thresholds will tighten each year.
Operators of cleaner fleets will be able to sell unused emissions allowances – or “carbon credits” – to more polluting ships. This creates a market mechanism attached to the pricing system.
The new rules will apply to all commercial ships docking at ports in any of the IMO’s 176 member states, starting in 2028.
“It’s not a consensus, but we’ve seen a large number of countries agree on a legally binding measure, which should be commended,” said Marie Fricaudet, a researcher at University College London’s Energy Institute who observed the talks.
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Too weak?
Critics warn that the pricing is far too low to encourage real change. The maritime sector still runs almost entirely on heavy fuel oil and is one of the most polluting industries. Without stronger action, its emissions could make up 17 percent of the global total by 2050.
The IMO’s own strategy calls for a 20 to 30 percent cut in emissions by 2030, and net zero by 2050. But the package agreed last week is expected to deliver only a 10 percent reduction by 2030, based on 2008 levels.
“We could have achieved the emission reduction targets if one of the measures was strong enough to catch up with the others,” said Fricaudet.
“But the set of measures was not up to par. In the current state of the text, the reduction targets set by the strategy are not achievable. This is quite disappointing because it takes us away from the Paris Agreement trajectory.”
Transport and Environment estimated that nearly 90 percent of the industry’s emissions would be exempt from penalties under the current design.
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Billions in revenue
The system is expected to raise around $10 billion per year.
Some of this revenue will go toward supporting the transition to clean shipping in developing countries. A portion will also be reserved for clean fuels that are not yet cost-competitive, such as methanol, ammonia and hydrogen.
“It’s very low compared to what some states were hoping for. But the architecture is in place and the measures will be revised in 2030 to be strengthened,” said Fricaudet.
By 2030, at least 5 percent of the fuel used in international shipping must come from zero-emission sources.
The rest of the money is meant to be redistributed more broadly – not just to governments, and not limited to maritime projects – but how that will work in practice remains unclear. A fund to manage the money has yet to be established, and negotiations on its scope are ongoing.
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Loophole warnings
Campaigners warn that weak rules could encourage the use of biofuels made from palm and soybean oil, which are cheaper than cleaner alternatives but far more damaging. These fuels emit twice as much CO2 and contribute to deforestation.
“The current agreement, devoid of safeguards against land use change, could trigger the emission of 270 metric tonnes of CO2,” Transport and Environment said.
“Multilateralism is not dead. Despite a tumultuous geopolitical environment, the IMO agreement creates momentum for alternative marine fuels,” said Faïg Abbasov, the group’s shipping director.
“But unfortunately, it is first-generation biofuels, forest destroyers, that will benefit from the strongest push over the next decade.”
Fricaudet also warned that the deal leaves the door open to short-term fixes that could undermine long-term progress. These include liquefied natural gas – a methane emitter – and carbon capture systems that allow ships to keep burning fossil fuels.
“Some actors might be tempted to use liquefied natural gas, fuels from crops, or install carbon capture facilities,” she said.
“The regulation nevertheless also provides incentives for so-called net zero carbon technologies, which have the potential to engage in a long-term transition.”
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US opposition
The United States, under the administration of Donald Trump, opposed the deal and attempted to block it by encouraging other countries to walk out of the talks.
It was absent from the start of the session and sent a diplomatic note on 9 April stating that it “refuses all efforts to impose economic measures against its ships based on greenhouse gas emissions or fuel choice”.
The note warned that the US government would consider “reciprocal measures to offset the costs imposed on American ships” and accused the IMO of using environmental protection as a cover for “wealth redistribution”.
Despite its efforts, the US failed to prevent the agreement from moving forward.
“It’s a bad development, but not a bomb dropped in the middle of negotiations either,” said Bastien Bonnet-Cantalloube from Carbon Market Watch, a Brussels-based NGO that monitors carbon markets and climate policy.
“They were already very little present, and this withdrawal on the part of the current US administration is not very surprising.”
Bonnet-Cantalloube added that US influence would be limited.
“American ships that make a stop at a foreign port will be obliged to apply it, whether they want to or not.”
This article was adapted from the original version in french by RFI's Géraud Bosman-Delzons
