IMO talks on global shipping carbon price to continue this week

Countries are preparing to advance talks on key shipping climate laws, including a carbon price—the first global emission price on any sector—at the UN’s International Maritime Organization (IMO).

The negotiations will take place over a two-part summit, technical talks (ISWG-GHG-16) on 11-15 March and a climate summit (MEPC 81) on 18-22 March, in London.

The IMO’s shipping carbon price talks are at a crucial stage, with countries set to negotiate on the design of this policy, including crucial questions about the price and revenue distribution.

The IMO agreed under its 2023 Revised Strategy that shipping needs a ‘GHG emission pricing mechanism’, and to adopt it in 2025. The goal is to help close the price gap between fossil fuels and green energy, and use the revenue generated in this process for an equitable transition.

The policy is negotiated as part of a ‘basket’ of different measures as an ‘economic measure’, intended to deliver emission cuts agreed last year: 30% by 2030, 80% by 2040, to reach zero by 2050. The basket also includes a ‘technical measure’ (green energy standard/mandate) to incentivise the use of clean energy on ships.

Here are the main emission pricing proposals to the upcoming talks:

• Pacific Island states and Belize submitted a fresh proposal for an emission price, a levy, of $150/tonne of emissions, which is seen by experts as the most climate ambitious and equitable.

• The EU countries back carbon pricing and using emission revenue for an equitable energy transition, but have not yet put a dollar figure on this price.

• The industry considers a price of $100/tonne of emissions, and expects any potential negative economic impacts on states to be avoided.

• China, Norway, UAE and Brazil proposed a fuel mandate and revenue mechanism (IMSF&F), which experts warn would incentivise further use of fossil gas (LNG) until 2030, without generating the necessary revenue to pay for an equitable transition.

Civil society and NGO statements ahead of the negotiations:

Ana Laranjeira, Shipping Manager, Opportunity Green, said: “If we are to stand a chance at keeping the 1.5°C goal within reach in a way that is just and equitable, the IMO must develop and adopt an ambitious levy by 2025, such as the Pacific and Belize proposal for a levy of $150/tonne of emissions, alongside a strong technical measure. Holding polluters accountable is critical, and a levy would not only prompt a shift to green energy and reduce emissions, but also provide much-needed funding to ensure that no country is left behind in this transition.”

Aiofe O’Leary, Director of SASHA Coalition (Skies and Seas Hydrogen-Fuels Accelerator), said: “As the International Maritime Organization comes together to consider how to move forward with decarbonising shipping, they should keep in mind which fuels are truly sustainable long term. Only green hydrogen and green hydrogen-derived fuels are compatible with the Paris Agreement targets. Countries must keep this in mind as they move forward with any kind of a fuel standard. Further to ensure that these fuels are able to compete on a level playing field, the use of fossil fuels in shipping must be adequately priced, and pricing shipping’s emissions will help to close the price gap between conventional and alternative fuels. And luckily, there is a great proposal on the table from the Pacific and Belize for a levy of $150/tonne of emissions that would do just that.”

John Maggs, President of Clean Shipping Coalition, said: “Setting goals is one thing, but agreeing and implementing the regulations that will propel the shipping sector towards a clean and just transition is quite another matter. The hard work for the IMO starts during next week’s ISWG meeting and there is no single tool that will do the job. A greenhouse gas (GHG) levy on ship fuel, such as the $150 proposal from Pacific Island countries and Belize, is essential to funding a just energy transition and ensuring no one is left behind. An IMO GHG fuel/energy standard is also needed to incentivise the uptake of wind propulsion and ensure that future new fuels are available when required. And most importantly, the IMO must revise its Carbon Intensity Indicator and agree on tough new requirements to ensure that ships are operated efficiently now and into the future. The latter is especially important to ensure the lowest cost, most efficient energy transition and to incentivise shipping behavior, such as slower speeds, that will also provide important ocean health co-benefits.”

Delaine McCullough, Shipping Emission Campaign Manager, Ocean Conservancy, said: “While much of the IMO negotiations will focus on how to accelerate the energy transition, it is critical that this transformation does not come at the expense of geographically remote and climate-vulnerable countries, especially small islands, that already face high shipping costs and are being forced to adapt to the impacts of climate change—a crisis which these countries contributed the least to. There is no time to waste debating proposals that we know will keep the IMO from meeting its target of zero emissions by 2050. Instead, the IMO must focus on strengthening energy efficiency standards and enforcement; implementing technical and economic policies that penalize greenhouse gas emissions and promote the uptake of zero-emission fuels; and ensuring an energy transition that leaves no one behind. The time for ambitious, thoughtful action is now.”

Jim Gamble, Senior Director, Arctic Program, Pacific Environment, said: “In the last year, the IMO steered us towards more climate friendly vessels but missed the mark on aligning with the critical 1.5C threshold established by the Paris Agreement. We’re now looking to the upcoming meetings to establish efficiency measures, bypass false fuel solutions like liquified natural gas. As the world’s shipping regulator, we call on the IMO to move shipping towards a future free of dangerous climate pollutants, and other harmful emissions, to ensure cleaner air, water, and a more livable planet for all.”

Anais Rios, Policy Officer, Seas At Risk, said: “International shipping is embarking on an important journey and must take strides towards both decarbonisation and reducing its impact on ocean life. While decarbonisation is crucial, there are also other pressing issues that need addressing: chemical and oil spills, whale strikes and underwater noise pollution are common occurrences in shipping, seriously undermining ocean health. By embracing wind power and implementing well-designed regulations that drive improvements in operational energy efficiency, shipping can both decarbonise and also protect ocean health.”

Pricing shipping emissions gained significant media attention last year in connection to the global climate finance reform led by France and Kenya, although this revenue will be entirely separate and additional to the UNFCCC Loss & Damage Fund.
Source: Global Strategic Communications Council (GSCC)