The UN’s International Maritime Organization (IMO) has agreed on a key climate policy for global shipping–including pricing of emissions–aimed at delivering on the 2023 Revised Strategy goals: an equitable transition to net-zero by/around 2050.
This follows a vote in the MEPC 83 plenary on Friday, 11 April. The policy will be formally adopted in October this year, but some policy details still remain to be finalised.
Countries agreed on a policy framework that includes the world’s first meaningful global carbon pricing scheme on any industry polluter.
From 2028, all ships in the world have to either start using a less-carbon intensive fuels mix, or pay for the excess. A ship continuing to use conventional (fossil) bunker fuel would have to pay a $380 fee on its most intensive emissions, and $100 per tonne on remaining emissions above a lower threshold.
The agreement will achieve only 8% absolute emission reduction by 2030, according to UMAS, falling short of the IMO’s own goals in the Revised Strategy: 20% emission reduction by 2030, striving for 30%.
The carbon intensity-based regulation will allow fossil LNG initially, but this fossil fuel will increasingly be penalized throughout the 2030s, undermining the business case for LNG ships.
The compromise is expected to raise $30-40 billion by 2030 ($10 billion per year), likely to be used to fund clean energy use on ships. However Pacific Island states say this is not enough to fund the “just an equitable transition” IMO committed to.
Countries voted on the Chair’s compromise, following objections from Saudi Arabia, UAE and other petro-states on procedure and disagreement over the “high” level of ambition in the discussions, who called for a vote:
63 countries in favour: Brazil, China, the EU, India, Japan, Korea, South African, Singapore, Norway and others.
16 countries against: Saudi Arabia, UAE, Oman, Venezuela, Russia, Venezuela and other petro-states.
25 countries abstained: Pacific Island states (Kiribati, Fiji, Republic of the Marshall Islands, Solomon Islands, Tonga, Tuvalu, Nauru, Palau, and Vanuatu), Seychelles, Argentina, and others.
Tuvalu expressed concerns with the outcome on behalf of the Pacific Islands in the plenary, regarding: the need for stronger energy incentives; intransparency and exclusion of Pacific voices from the negotiation process; and promoting just and equitable transition
Hon. Minister Ralph Regenvanu, Minister of Climate Change Adaptation, Meteorology, Geo-Hazards, Environment, Energy, and Disaster Management of Vanuatu, said: “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.”
Ambassador Albon Ishoda, Marshall Islands Special Envoy for Maritime Decarbonization, said: “We are not done. We will be back. Alongside our friends from the Caribbean, the Pacific, Africa, Central America, and the UK. Still standing. Still steering.”
Emma Fenton, Senior Director, Climate Diplomacy, Opportunity Green, said: “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. The IMO has turned down this historic opportunity to champion the perseverance, leadership, and ambition of climate vulnerable states, amongst them Pacific Islands, Caribbean and African states, who are on the frontlines of the climate crisis. That many of these countries abstained from the vote shows the measures are far from what was needed to address the crisis.
The only response now is to double down on our determination. States must work hard to remedy the situation we are left with today, both nationally and regionally. This is not the end, and we must look to the future to ensure ambition is raised and a just and equitable transition is guaranteed.”
Aoife O’Leary, Founder of the SASHA Coalition, said: “The IMO has passed up on a unique opportunity to guarantee the shipping industry’s long-term resilience and help it fulfil its climate ambitions. The sector’s only credible path to net zero that doesn’t compromise biodiversity is green hydrogen e-fuels. IMO measures could have delivered the incentives needed to jumpstart the transition to these fuels, creating the enabling regulatory environment to derisk investment and unlock much-needed finances to scale production. Instead, delegates have agreed a measure that may lock in the use of environmentally destructive biofuels and LNG. The baton now passes to the shipping industry itself to take ever bolder steps to raise the bar for climate action, and continue setting an example of strong leadership in spite of the IMO’s failures.”
Jamie Yates, Climate and Renewable Energy Analyst, Pacific Environment, said: “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 incentivizing 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.”
In 2023 the IMO agreed that both an economic (e.g. carbon pricing) and a technical (e.g. Global Fuels Standard – GFS) measures are necessary to deliver on its climate commitment: 20% emission reduction by 2030, 80% emission reduction by 2040, reaching zero by/around 2050 in an equitable way.
At the technical negotiations on 31 March – 4 April countries moved forward with a single policy encompassing both elements. This mechanism was finalised at the MEPC 83 summit on 7-11 April and will be adopted in October. Some elements (namely on revenue distribution) still remain to be resolved.
The agreed mechanism requires ships to pay fees for non-compliance with two sets of carbon intensity targets (easy to achieve “base target” and more strict “direct compliance target”), and trade credits to comply (a chart available on request).
For example, a ship continuing to use conventional bunker fuel in 2028 would have to pay $380 per tonne per tonne on the 4% chunk of emissions above the base target, and $100 on the remaining 13% (17% – 4%) of emissions above the Direct Compliance target.
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.
They were opposed by China, Brazil, Saudi Arabia and other petro-states who disagreed with a flat levy. This minority group–aided by the IMO as well as EU countries who rolled back on their own flat levy proposal–undermined the majority support of +60 countries for a universal carbon levy, which formed ahead of the talks.
Source: SASHA Coalition, Pacific Environment, Opportunity Green