The latest IMO agreement is considered pivotal for the future of the shipping industry. Commenting on its impact, ING’s Senior Sector Economist, Transport and Logistics, said that “the IMO agreement exceeds expectations in terms of willingness to cooperate and adopt global financial incentives. From an economic point of view, carbon taxing is the most inefficient solution to level the playing field, but it is eventually inevitable.

However, in this compromise, the vast majority of shipping emissions (between the upper and lower boundaries) will be exempted from taxing, which limits the system’s strength. Outperformers will be rewarded, but details still need to be clarified.
A weakening aspect is the ambition of the boundaries, which have been set at -8% and -21% for 2030 compared to 2008 levels. This is less ambitious than the 30% the IMO currently strives for.

The IMO seems to be (low carbon) fuel neutral in this regard. This means that the cheaper and easiest-to-use biofuel option will often be preferred. Consequently, the uptake of alternative fuels like methanol or ammonia won’t be much easier.”
Source: Rico Luman, Senior Sector Economist, Transport and Logistics at ING