IMO agrees on first ever carbon pricing on global shipping

63 countries voted in favour of the policy, which has potential to raise $10 billion annually to fund transition to greener fuels 

In a boost for the climate fight, the UN’s International Maritime Organization (IMO) has agreed on a key climate policy for global shipping, including pricing of emissions. The aim is to deliver on the 2023 Revised Strategy goals — which boils down to at least 20% emissions reduction by 2030, followed by an equitable transition to net-zero around 2050.

Agreed by vote in the MEPC 83 plenary on 11 April, the policy will be formally adopted in October 2025 pending the finalisation of the entire policy. When adopted, this would become a policy framework which is the world’s first meaningful global carbon pricing scheme on any industry. 

The initial impacts of this policy will be limited. According to UMAS, this measure would lead to an absolute emission reduction of just 8% by 2030, far less than the IMO’s own goals in the Revised Strategy.

While 63 countries, including Brazil, China, the EU, India, voted in favour of the policy, petrostates like Saudi Arabia, UAE, Oman, voted against. 25 countries abstained from voting, including Pacific Island states.

Pay for pollution

After the policy is in place, from 2028, all ships in the world have to either start using a less-carbon intensive fuels mix, or pay for the excess. In other words, a ship relying on fossil fuel would be eligible for paying a polluter fee up to $380 per tonne on its most intensive emissions, and $100 per tonne on remaining emissions above a lower threshold.

This is expected to raise around $30-40 billion by 2030 ($10 billion per year), likely to be used to fund clean energy use on ships. However, the shipping industry will be allowed to be eased into this transition. The policy will allow ships to operate on fossil LNG initially, which will begin to be penalised more and more in the 2030s. 

“This is a significant moment where the IMO has delivered targets, but failed to meet its own ambition on delivering a just and equitable transition and properly incentivising sustainable long term fuel and technology solutions. We remain committed to advocating for the needed emissions reductions and revenues to address the harms that climate vulnerable countries will increasingly face,” said Jamie Yates, climate and renewable energy analyst at the Pacific Environment.

Not an equitable solution

“Let us be clear about who has abandoned 1.5°C. Saudi Arabia, the US and fossil fuel allies pushed down the numbers to an untenable level and blocked progress at every turn. These countries – and others – failed to support a set of measures that would have gotten the shipping industry onto a 1.5°C pathway. And they turned away a proposal for a reliable source of revenue for those of us in dire need of finance to help with climate impacts,” said Ralph Regenvanu, Minister of Climate Change Adaptation, Meteorology, Geo-Hazards, Environment, Energy, and Disaster Management of Vanuatu.

A coalition of Pacific, Caribbean, Central American and African countries were pushing for a full emission coverage within the now agreed framework, e.g. effectively a universal carbon levy, with in- and out-of-sector revenue distribution, including for adaptation and mitigation. 

“The IMO 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 2 years ago. The weak measure approved means aiming for a low bar and dragging our feet to get there. It will neither ensure sufficient emissions reductions, nor raise the revenues needed for a just and equitable transition,” said Emma Fenton, Senior Director, Climate Diplomacy, Opportunity Green.

About The Author

Editorial Team

A team of handpicked and dedicated writers committed to fact check each climate-related statement. Go to the roots and intent of each policy implemented, internationally and at home to help you understand climate better

See author's posts