In a landmark move, the United Nations’ International Maritime Organization (IMO) has agreed on a global carbon pricing mechanism for the shipping industry, marking a significant step toward tackling emissions from one of the world’s most polluting sectors.

The policy, expected to be formally adopted in October 2025, is projected to generate between $30–40 billion in revenues by 2030—roughly $10 billion annually. These funds will be ringfenced exclusively for decarbonising maritime transport, rather than contributing to broader climate finance for developing nations.

While hailed as a major breakthrough, the agreement is expected to deliver only a 10% absolute emissions reduction in the shipping sector by 2030—well below the IMO’s own revised strategy from 2023, which calls for at least a 20% reduction by the same year, and a stretch goal of 30%.

From 2028, vessels will either have to adopt lower-carbon fuel mixes or pay for excess emissions. Ships continuing to use conventional fossil fuels will face a charge of $380 per tonne for the most carbon-intensive portion of their emissions, and $100 per tonne for the remainder above a set threshold.

The agreement, supported by 63 countries—including Brazil, China, the EU, South Africa, Kenya, Senegal, and Namibia—sets a global precedent. However, the policy faced strong opposition from oil-rich nations including Saudi Arabia, the UAE, Russia, and Venezuela, who challenged both the substance and process of the deal. Despite the resistance, a compromise proposal championed by Norway, which chaired the negotiations, passed in the final vote.

Notably, the United States delegation was absent during the vote, having earlier circulated a proposal urging countries to withdraw from negotiations—a move that drew criticism from multiple quarters.

A bloc of over 60 nations, led by Pacific Island states, had advocated for the revenue to support broader climate resilience efforts in vulnerable nations. Speaking on behalf of the Pacific, Tuvalu expressed frustration at the lack of transparency and inclusion in the talks, warning that the new plan may fail to incentivise cleaner fuel adoption effectively.

While the agreement allows initial use of fossil-based liquefied natural gas (LNG), the pricing mechanism is designed to gradually penalise such fuels over time.

Minister Antony Derjacques of the Seychelles criticised the limited ambition of the deal.

He said, “The developing countries with the greatest need came here and offered a solution. How can the other major economies ask us to take a weak deal home to our people, who are suffering as a result of the climate crisis?”

Maria Ogbugo of the African Future Policies Hub viewed the outcome more positively.

She said, “The best possible outcome was achieved. African delegations, including Kenya, Namibia, Senegal, and South Africa, must be commended. The shipping industry has taken the lead in showing that climate action is possible—even for hard-to-abate sectors.”

The Executive Director at the same organisation, Faten Aggad added “Reaching consensus on decarbonisation measures was never going to be easy. Yet the result still puts a price on emissions, which is a crucial starting point—especially for vulnerable economies.”

The maritime advisor at the Micronesian Centre for Sustainable Transport, Eldine Glees, highlighted the link between climate levies and sustainable development.

The advisor said, “Several African delegations showed exemplary leadership by tying the levy to food security, resilience, and equitable revenue distribution. Maintaining unity will be vital as implementation begins.”

The CEO of the European Climate Foundation and a key architect of the Paris Agreement, Laurence Tubiana, said the agreement was a step forward but not enough.

The CEO said, “The lack of a broader shipping levy is a missed opportunity. The world needs more cooperation, and progressive partners can still push for breakthroughs in climate finance.”

Vanuatu’s Climate Change Minister Ralph Regenvanu said, “Let us be clear about who has abandoned 1.5°C. Saudi Arabia, the US, and other fossil fuel allies blocked progress at every turn. This was a chance to fund climate-vulnerable nations. It was lost.”

Ambassador Albon Ishoda of the Marshall Islands concluded with a note of resilience.





https://www.vanguardngr.com/2025/04/un-backs-global-carbon-pricing-scheme-for-shipping-industry/