The world’s largest maritime nations met in London on Tuesday to discuss regulations aimed at transitioning the shipping industry away from fossil fuels to reduce emissions. If adopted, this agreement would be the first global fee on greenhouse gas emissions related to climate change. Currently, most vessels operate on heavy fuel oil, which emits carbon dioxide and other pollutants.
The discussions are taking place at the International Maritime Organisation (IMO) headquarters and will continue through Friday. The Trump administration has opposed the proposal and threatened retaliatory actions if other nations support it, raising concerns about the agreement’s future, according to The Associated Press.
In April, IMO member states reached a consensus on the regulatory framework, with plans to finalise its adoption at this meeting. Delaine McCullough from the Ocean Conservancy noted that this development could significantly advance climate action, public health, and marine conservation.
“This agreement provides a lesson for the world that legally-binding climate action is possible,” said McCullough, shipping programme director for the nonprofit environmental advocacy group.
“The energy and digital transition of shipping has already started. However, the absence of global regulations will increase the costs of this transition in the long run,” said Arsenio Dominguez, Secretary-General of the IMO, during his opening remarks at the meeting.
Over the past decade, shipping emissions have risen to approximately 3% of the global total due to increased trade and reliance on fossil fuels for cargo transport. In response, the “Net-Zero Framework” has been established, introducing a marine fuel standard that progressively reduces allowable greenhouse gas emissions.
This framework includes a pricing system that imposes fees for every ton of greenhouse gases emitted beyond specified limits, effectively implementing the first global tax on such emissions. It features a baseline compliance level for greenhouse gas intensity and a more stringent direct compliance target requiring further emission reductions.
Vessels using lower-emission fuels than those mandated under the direct compliance target can earn “surplus units.” At the same time, ships with higher emissions must purchase these credits or pay a penalty of $100 per ton of carbon dioxide equivalent for non-compliance. Those who meet the baseline target but fail to comply with direct requirements will also incur penalties.
Additionally, ships with greenhouse gas intensity below a specified threshold will receive performance rewards. This structure is expected to generate $11 billion to $13 billion annually, with funds allocated to the IMO for investments in sustainable fuels and technologies. This support aims to promote low-emission vessels and assist developing countries in transitioning away from outdated, polluting fuels and ships.
Using alternative fuels
IMO has established a significant goal for the shipping industry to achieve net-zero greenhouse gas emissions by approximately 2050. To facilitate this objective, the IMO is actively promoting the adoption of zero or near-zero-emission fuels. Vessels can effectively reduce their emissions by employing alternative fuels, electricity, or carbon capture technologies. Furthermore, advancements in wind propulsion and energy efficiency play a crucial role in diminishing fuel consumption.
Given that large ships generally have a lifespan of around 25 years, the industry must initiate investments now to meet the 2050 target. Effective in 2027, new regulations will introduce penalties for emissions from large oceangoing vessels exceeding 5,000 gross tonnage, which are responsible for 85% of international shipping’s carbon emissions. These penalties will begin in 2028. The International Chamber of Shipping, representing over 80% of the global merchant fleet, has expressed its support for these regulations.
Biofuels need vast amounts of crops
Heavy fuel oil, liquefied natural gas, and biodiesel are expected to dominate the shipping industry through the 2030s and 2040s, unless the IMO incentivises greener alternatives.
According to modelling from Transport and Environment, a Brussels-based environmental organisation, current regulations make biofuels the most cost-effective compliance option.
However, the agricultural demands of biofuels can displace less profitable food production and lead to deforestation, as highlighted by Faig Abbasov, the shipping director at T&E. Abbasov calls for the IMO to focus on scalable green alternatives rather than promoting biofuels derived from food crops.
The existing proposal before the IMO is unlikely to achieve net-zero emissions by 2050. Additionally, green ammonia is expected to become competitively priced for shipowners by the late 2040s, while green methanol could significantly contribute to the transition to sustainable shipping.
The April meeting in London
IMO is committed to achieving consensus in its decision-making process; however, it is anticipated that member nations will proceed with a vote on the proposed regulations. During the recent meeting in April, a vote was initiated to approve the content of these regulations. Although the United States was not present at that time, the US plans to participate in the upcoming session.
During the opening session on Tuesday, several nations, including Saudi Arabia, the United States, and Russia, expressed reservations about the agenda, which predominantly focuses on adopting the Net-Zero Framework by the end of the week.
Teresa Bui, the Senior Climate Campaign Director at Pacific Environment, conveyed optimism about the situation, noting that “global momentum is on our side,” and suggests that a majority of countries are likely to support the adoption. Pacific Environment holds a consultative, non-voting status at the IMO. The failure to adopt these regulations could further postpone the decarbonisation efforts within the shipping industry.
“It’s difficult to know for sure what the precise consequences will be, but failure this week will certainly lead to delay, which means ships will emit more greenhouse gases than they would have done and for longer, continuing their outsized contribution to the climate crisis,” said John Maggs, of the Clean Shipping Coalition, who also participated at the London meeting.
