This article was published by The Energy Mix on April 14, 2025.
By Chris Bonasia
An international agreement to tax greenhouse gas emissions from ships has met mixed reactions, as either a global breakthrough or a watered-down compromise adopted despite U.S. attempts to sink it.
Member countries of the Marine Environment Protection Committee (MEPC 83) of the United Nations’ International Maritime Organization (IMO) met last week to negotiate new rules for reducing shipping GHG emissions.
The meetings concluded with a plan that could force shipping companies to pay for emissions that exceed a certain threshold. Initial outcomes are expected to be modest, with emissions cuts of about 8 per cent by 2030—less than the 20 per cent reduction outlined in the IMO’s 2023 climate strategy, the Guardian reports.
After the U.S. loudly left ahead of the vote, the deal passed with 63 of 103 nations voting in favour. But 16 countries—predominantly petrostates—opposed it, while 25 abstained, including several small island states that said the deal doesn’t go far enough.
“We couldn’t take home the outcome that was given to us as a take-or-leave option—with rich countries asking us to pay for their technological transition while leaving us behind,” said Hilton Kendall, minister of transportation, communication and information technology of the Marshall Islands.
Lloyd’s Register explains [pdf] that the meeting resulted in the regulations’ text being finalized and approved, though the approval was unusual because opposing parties called a formal vote— in a setting where formal votes are “extremely rare.” Though the rules received 79 per cent support, they will now be circulated to countries signed to MARPOL Annex VI—a set of regulations that regulate ships’ air pollution—ahead of an extraordinary session in October, where the new regulations will need two-thirds approval to take effect.
The MEPC’s recent deal will apply to ships of 5,000 gross tonnes and above that travel internationally, which account for 85 per cent of total emissions from international shipping. Ships will need to reduce their fuel emissions intensity in line with staged targets towards reaching net-zero emissions by 2050.
Starting in 2027, ships that fail to meet these targets will need to buy “remedial units” for emissions above target thresholds, priced at $380 per tonne of carbon dioxide equivalent. Ships using zero or near-zero greenhouse gas technologies will be eligible for financial rewards, the IMO says.
Remedial units will be bought from the IMO, which will place the revenue into a Net Zero Fund to support a just transition and compensate for negative impacts imposed on developing countries, writes Climate Home News.
A group of developing small island states had called for a universal levy on shipping emissions that could have been more effective. Many of these countries abstained from voting, saying the final agreement will allow wealthier ship owners to buy their way out of reducing emissions, and leaves the door open to ships switching to biofuels—a change that critics say will drive deforestation for new farmland to grow biofuel feedstocks, says Pacific Media Network.
The Guardian also reports that ship owners may be inclined to avoid fees by switching to liquefied natural gas, but rules are expected to tighten in the 2030s to penalize LNG more heavily.
Major economies like China and Brazil had opposed the levy, but signed on to the compromise alternative. Major petrostates like Saudi Arabia, Russia, and Iran voted against the deal. The U.S., meanwhile, had left the talks in protest before voting, saying that “such a blatantly unfair measure” would be met with reciprocal measures to offset fees to U.S. ships and the American people, Politico reports
As the BBC points out, the 178 U.S.-flagged ships amount to only 0.57 per cent of worldwide commercial shipping tonnage. So if the country refuses to comply with the new rules, any avoided fees are unlikely to make a significant difference to the intake of the Net Zero Fund.
Other onlookers said the agreement is notable for passing despite the tumult that has plagued international governance in recent months, writes We Don’t Have Time founder Ingmar Rentzhog, in his regular column for Forbes.
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