First-ever Global Shipping Emissions Levy Approved, But Pacific Push For Stronger Deal Fails

Wednesday, 28 May 2025, 2:24 pm
Article: RNZ

Shipping companies will soon have to pay for carbon emissions produced by its vessels for the first time, but the new deal agreed by the global maritime watchdog is still significantly lower than what was demanded by Pacific Island nations.

The shipping emissions framework was finalised by the International Maritime Organisation (IMO) at its meeting last month in London.

While it is yet to be ratified, a formal vote in October on its adoption is expected to be successful.

The IMO is the UN agency responsible for the safety and security of shipping and the prevention of marine and atmospheric pollution by ships in international waters.

Once implemented, the proposed global emissions scheme would subject ships to a charge on their greenhouse gas emissions.

After a certain threshold, that charge is increased, as set out by the finalised framework. Ships would also have the ability to trade carbon credits under the scheme.

Overall, the scheme is expected to generate about US$10 billion a year - a fraction of the $60b a year Pacific and Caribbean nations wanted in their own carbon levy pitch for the framework.

UCL Energy Institute's Dr Tristan Smith, a professor of energy and transport, told RNZ Nine to Noon that, while agreement on a global emissions scheme is significant and likely a world-first, it could have been more robust.

"In climate terms, and as a scientist, it's always frustrating because you know what needs to be done in order to keep us on the temperature goals that we've talked about in the Paris agreement," he said.

However, achieving that in practice, he said, "is always incredibly difficult because of the politics of climate negotiations".

"We also had a particularly difficult time this year with the geopolitical situation, referring to the fact that the Trump administration has taken a strong anti-climate stance, which put the US in a very different position to how they were in previous administrations, and changed the dynamics of the IMO a bit."

Membership of the IMO includes 176 states and more than 150 intergovernmental and non-governmental organisations.

Dr Smith said the end result of negotiations between various member parties on the proposed scheme resulted in a significantly lower carbon price for shipping emissions than what he believed was needed.

"In the final package, we've got about a $15 per ton of greenhouse gas emitted price that's coming in, and we thought that we needed somewhere between 100 and $150.

"It's a significant reduction, but it still exists and it's still a global agreement, which I believe makes it the first global carbon price."

As recently as February, Pacific nations had proposed a more ambitious global shipping emissions scheme.

Not only had the agreed IMO framework failed to meet that, it had also failed in achieving the IMO's own greenhouse gas strategy which it revised in 2023.

Smith said Pacific nations wanted a much tougher scheme to effectively drive the transition of the shipping sector to a low carbon model by charging higher costs for greenhouse gas emitters.

"Their vision was to have this transition of the shipping sector driven by a carbon levy - a universal price on greenhouse gas emissions that charged for every ton of greenhouse gas emissions about $150.

"Then coupling that with a mandate that reinforced the fact that this was going to be driven by stringent regulation [like] a hard fine or a penalty if you weren't reducing your emissions and driving a very steep reduction in greenhouse gas emissions, reaching nearly full decarbonisation by 2040."

Dr Smith said that "steepness" in the reduction of greenhouse gas emissions and "power" through a heavy levy was missing.

He said that in turn had effectively hampered the rate at which decarbonisation of the shipping industry would likely occur.

"Because we could really subsidise some of the very expensive, or currently very expensive solutions...at the early stage of decarbonisation and really enable companies to have the confidence to invest in scale.

"But also use significant amounts of revenue to help low income countries, not just [small island developing states and least developed countries] like the Pacific island states, but also middle income countries, low income countries, which will need support as we go through the transition."

He said these countries would need assistance to modernise and shift their their own shipping industries to a low-carbon model.

The cost of doing that, as well as the economic impacts of increasing transport prices, must be factored in, he added.

The finalised framework, which needs two-thirds of the IMO membership vote in October to be ratified, would cover all ships bigger than 5000 gross tons, such as largo cargo ships, in international waters if implemented.

Dr Smith believes that eventually it would also cover ships smaller than 5000 gross tons. At that point, all vessels that trade internationally would be captured by the shipping emissions scheme.

"It doesn't drive or change what national governments do with domestically operated ships. So coastal vessels servicing the coast of New Zealand, or ferries within New Zealand wouldn't be affected by this regulation. That's down to the national government to decide what to do," he said.

"In some ways though, that exactly illustrates why it's such a significant agreement, because it's the missing emissions in international waters that no one was counting that are now, at least in a framework here."

Dr Smith expectes the October vote on the final framework to be successful, despite previous opposition from several larger nations like Saudi Arabia, China, and Brazil.

Following that, the scheme was set to be fully implemented in 2027.

The UN said that timeframe would give "the industry time to adapt to new requirements and invest in alternative fuels and technologies".

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