Governments agree green shipping targets and fees for missing them

Ship owners who fail to meet the “base” targets on the path to achieving a 30% reduction by 2035 will have to buy “remedial units” from the IMO to make up the difference, priced at $380 a tonne of carbon dioxide equivalent.

The IMO will spend the money through a new “Net Zero Fund” on cleaning up the maritime sector, helping workers through the green transition and compensating for any negative impacts of that transition on developing economies, such as increases in the price of food due to higher shipping costs.

No money raised from selling remedial units will be spent outside the maritime sector, disappointing climate activists and some governments which had hoped the money could generate tens of billions of dollars per year in broader climate finance.

On top of these base targets, governments have set additional compliance targets which are harder to meet and would deliver a more ambitious reduction in emissions intensity of 43% by 2035.

If shipowners fail to meet these additional goals, they can make up for it through three options: buying cheaper second-tier remedial units at $100 a tonne; buying “surplus units” from ships that have met the goals; or using surplus units they have banked by over-achieving in previous years.

Governments have also agreed on a threshold for how polluting a shipping fuel can be and still be officially considered a “zero or near zero fuel”, making its use eligible for funding from the Net Zero Fund.

That threshold has been set at 19 grammes of carbon dioxide equivalent per megajoule (gCO2e/MJ) of energy, falling to a maximum of 14 grammes in 2035. This potentially sets up battles between industry and environmental lobbyists over the carbon intensity of different fuels, such as various types of biofuel.

The overall emissions reduction policy is expected to be formally adopted at an IMO session in October this year, with some technical details still to be resolved.

Fossil fuel nations opposed

In Friday’s vote on the new measures in London, 63 nations supported them, while 16 voted against and about 25 abstained. Those opposed were mainly nations whose economies rely on oil and gas – fossil fuels that currently power ships – like Saudi Arabia, Russia and Iran.

Explaining their opposition, the Saudi delegate said, “we believe in balance – achieving a balance between energy security and affordability, climate action and economic development”. His nation is “equally committed to all of these pillars and we understand that – in order to achieve progress – we must balance these priorities equally”, he added.

While some island nations supported the deal, a group of six abstained from the vote. Explaining their decision, Tuvalu’s transport minister Simon Kofe said the agreement was not ambitious enough and “lacks the necesssary incentives for industry to make the necessary shift to cleaner technologies”.

These and other island nations wanted a price on all shipping emissions from 2028 – and for that price to be at least $150 a tonne. On Monday, Marshall Islands ambassador Albon Ishoda warned reporters that his country and its allies would not support anything less than that.

On Friday, Kofe also expressed “disappointment” about how the deal was done, saying that small island developing states were not “adequately engaged in the formulation of this document”, which was “concerning”.

One nation that was not active at the talks was the United States, which has largely withdrawn from international environmental and climate processes under President Donald Trump, who supports the use of more fossil fuels.

Shipping news service Tradewinds reported that the US left the IMO talks on Tuesday night and threatened, in a letter sent to London-based embassies, “reciprocal measures so as to offset any fees charged to US ships” – although it is unclear what that might mean in practice.

Falling short on ambition?

Climate campaigners’ reactions were mixed. Mark Lutes, WWF senior advisor on global climate policy called it a “groundbreaking moment, which should signal a turning of the tide on greenhouse gases from global shipping”.

He said it is “the first international agreement that puts an entire sector on a mandatory reduction pathway towards net zero” but added it does not go far enough on some “key aspects”.

But Emma Fenton, senior director of climate diplomacy at nonprofit policy group Opportunity Green, said the agreement “fails climate-vulnerable countries and falls short of both the ambition the climate crisis demands and that member states committed to, just two years ago”.

“The weak measure approved means aiming for a low bar and dragging our feet to get there,” they added. “It will neither ensure sufficient emissions reductions, nor raise the revenues needed for a just and equitable transition.”

But, they emphasised: “This is not the end, and we must look to the future to ensure ambition is raised.”