Cargo ships are anchored in the Sea of Marmara as they await to cross the Bosphorus in Istanbul, Turkey, on April 13, 2025.
The world’s largest maritime nations gathered in London on Tuesday to consider adopting regulations that would move the shipping industry away from fossil fuels to slash emissions.
If the deal is adopted, this will be the first time a global fee is imposed on planet-warming greenhouse gas emissions. Most ships today run on heavy fuel oil that releases carbon dioxide and other pollutants as it’s burned.
Nations are meeting at the International Maritime Organization headquarters through to Friday. The Trump administration unequivocally rejects the proposal and has threatened to retaliate if nations support it, setting the stage for a fight over the climate deal.
In April, IMO member states agreed on the contents of the regulatory framework. The aim is to adopt it at this meeting.
That would be a major win for the climate, public health, the ocean and marine life, said Delaine McCullough at the Ocean Conservancy. For too long, ships have run on crude, dirty oil, she said.
“This agreement provides a lesson for the world that legally binding climate action is possible,” said McCullough, shipping program director for the non-profit environmental advocacy group.
“The energy and digital transition of shipping have already started. However, the absence of global regulations will increase the costs of this transition in the long run,” said Arsenio Dominguez, Secretary General of the IMO, during his opening remarks at the meeting.
Shipping emissions have grown over the past decade to about three per cent of the global total, as trade has grown and vessels use immense amounts of fossil fuels to transport cargo over long distances.
The regulations, or ‘Net-zero Framework’, set a marine fuel standard that decreases, over time, the amount of greenhouse gas emissions allowed from using shipping fuels. The regulations also establish a pricing system that would impose fees for every ton of greenhouse gases emitted by ships above allowable limits, in what is effectively the first global tax on greenhouse gas emissions.
There’s a base level of compliance for the allowable greenhouse gas intensity of fuels. There’s a more stringent direct compliance target that requires further reduction in the greenhouse gas intensity.
If ships sail on fuels with lower emissions than what’s required under the direct compliance target, they earn “surplus units”, effectively credits.
Ships with the highest emissions would have to buy those credits from other ships under the pricing system, or from the IMO at US$380 per ton of carbon dioxide equivalent to reach the base level of compliance. In addition, there’s a penalty of US$100 per ton of carbon dioxide equivalent to reach direct compliance.
Ships that meet the base target but not the direct compliance one must pay the US$100 per ton penalty, too.
Ships whose greenhouse gas intensity is below a certain threshold will receive rewards for their performance.
The fees could generate US$11 billion to US$13 billion in revenue annually. That would go into an IMO fund to invest in fuels and technologies needed to transition to green shipping, reward low-emission ships, and support developing countries so they aren’t left behind with dirty fuels and old ships.
The IMO, which regulates international shipping, set a target for the sector to reach net-zero greenhouse gas emissions by about 2050, and has committed to ensuring that fuels with zero or near-zero emissions are used more widely.
Ships could lower their emissions by using alternative fuels, running on electricity or using onboard carbon-capture technologies. Wind propulsion and other energy efficiency advancements can also help reduce fuel consumption and emissions as part of an energy transition.
Large ships last about 25 years, so the industry would need to make changes and investments now to reach net-zero around 2050.
If adopted, the regulations will enter into force in 2027. Large ocean-going ships over 5,000 gross tonnage, which emit 85 per cent of the total carbon emissions from international shipping, would have to pay penalties for their emissions starting in 2028, according to the IMO.
The International Chamber of Shipping, which represents over 80 per cent of the world’s merchant fleet, is advocating for adoption.
Heavy fuel oil, liquefied natural gas and biodiesel will be dominant for most of the 2030s and 2040s, unless the IMO further incentivises green alternatives, according to modelling from Transport and Environment, a Brussels-based environmental non-governmental organisation.
The way the rules are designed essentially makes biofuels the cheapest fuel to use to comply, but biofuels require huge amounts of crops, pushing out less profitable food production, often leading to additional land clearance and deforestation, said Faig Abbasov, shipping director at T&E.
They are urging the IMO to promote scalable green alternatives, not recklessly promote biofuels produced from food crops, Abbasov said. As it stands now, the deal before the IMO won’t deliver net-zero emissions by 2050, he added.
Green ammonia will get to a price that it’s appealing to ship owners in the late 2040s – quite late in the transition, according to the modelling. The NGO also sees green methanol playing an important role in the long-term transition.
The IMO aims for consensus in decision-making, but it’s likely nations will vote on adopting the regulations.
At the April meeting, a vote was called to approve the contents of the regulations. The United States was notably absent in April, but plans to participate in this meeting.
During the opening session on Tuesday, Saudi Arabia, the US, Russia and a few other countries intervened to express their reservations about the meeting’s agenda, which strongly focuses on adopting the Net-zero Framework by the end of the week.
Teresa Bui at Pacific Environment said she is optimistic “global momentum is on our side” and a majority of countries will support adoption. Bui is senior climate campaign director for the environmental non-profit, which has consultative, or non-voting, status at the IMO.
If it fails, shipping’s decarbonisation will be further delayed.
“It’s difficult to know for sure what the precise consequences will be, but failure this week will certainly lead to delay, which means ships will emit more greenhouse gases than they would have done and for longer, continuing their outsized contribution to the climate crisis,” said John Maggs, of the Clean Shipping Coalition, who is at the London meeting.
