The latest round of negotiations, held during the IMO’s Intersessional Working Group on Reduction of GHG Emissions from Ships (ISWG-GHG 18), marks an important step toward achieving the IMO’s 2023 GHG Reduction Strategy. This strategy sets the ambitious goal of reducing emissions from ships, with mid-term measures expected to be adopted by 2025.
One of the core objectives of these discussions is the establishment of two essential elements in the IMO’s strategy: a technical element in the form of a goal-based marine fuel standard and an economic element based on a maritime GHG emissions pricing mechanism.
The goal-based marine fuel standard would regulate the phased reduction of a ship’s GHG intensity through a gradual shift to cleaner fuels. This standard is set to play a crucial role in the global push toward reducing the environmental impact of the shipping sector.
At the same time, the proposed economic element—a pricing mechanism for GHG emissions—aims to incentivize the transition to low-carbon fuels while ensuring that the costs associated with this shift are distributed across the industry.
Discussions centered around the draft text for the “IMO net-zero framework” developed at MEPC 82. This framework, which incorporates input from Member States and international organizations, outlines proposed amendments MARPOL, Annex VI. These amendments, if approved, would integrate the mid-term measures into the treaty, which already represents 97% of global shipping tonnage.
Global support for a carbon levy
One of the most significant outcomes of this round of discussions is the growing support for a global carbon levy on shipping’s GHG emissions. A coalition of 48 countries, spanning the Caribbean, Africa, Asia, and Europe, has endorsed a levy ranging from $18 to $150 per tonne of GHG emissions.
This levy has the potential to generate billions of dollars annually, which could be reinvested into the transition to green fuels, supporting early adopters and providing financial incentives for the uptake of zero and near-zero fuels, such as green methanol and ammonia.
The proposed levy has garnered broad backing from over three-quarters of IMO Member States, though significant concerns from countries like China and Brazil remain. These concerns must be addressed to ensure a comprehensive and equitable solution that fosters the sector’s decarbonization while considering the interests of developing nations.
The role of the IMO Fund
Another crucial development is the establishment of an IMO Fund, designed to generate revenue from ship emissions charges. This fund would offer financial incentives to ships using low-emission fuels, bridging the cost gap between conventional fossil fuels and more sustainable alternatives.
Progress and challenges ahead
While the industry largely supports a global carbon levy, further discussions will be necessary to resolve key issues such as the price of the levy, revenue distribution, and the mechanisms for enforcing compliance.
Despite these challenges, the international community remains optimistic about reaching consensus by the next MEPC meeting in April 2025.
Looking to the future
The upcoming IMO MEPC 83 will be pivotal for the future of global shipping. At this critical meeting, mid-term measures to reduce greenhouse gas emissions will be negotiated. These measures will create incentives for adopting new fuels, and from our perspective, the key priority is ensuring they accelerate the transition as much as possible. With just a few weeks remaining before this crucial IMO Committee meeting, it is encouraging to see negotiations progressing in a positive and cooperative spirit.
Industry stakeholders are closely watching the negotiations, hoping that the IMO will finalize measures that provide clarity and support for the transition to green fuels. A universal carbon levy and robust economic incentives are seen as crucial for driving the maritime sector toward its goal of achieving net-zero emissions by 2050.
