World’s First Global CO2 Charge Inches Closer at IMO Meeting

By Jack Wittels (Bloomberg) —

The shipping industry is being lined up as a guinea pig for a world-first: a global, mandatory charge on greenhouse gas emissions.

The International Maritime Organization — which regulates shipping worldwide — inched closer toward such a levy at talks held in London this week. The United Nations agency plans to finalize the detail of the measure next year, and have it introduced in 2027. 

While the timeline is clear, there’s far less certainty about how it will actually work and whether there will be a significant impact on the emissions of an industry that carries 80% of world trade and spews more than a billion tons of carbon dioxide into the atmosphere each year.

“We will have a pricing mechanism,” said the IMO’s secretary general, Arsenio Dominguez, in a meeting with journalists at the organization’s London headquarters. “Of that, I have no doubt.”

Countries including the Marshall Islands — the flag state for thousands of vessels — earlier submitted a proposal for a minimum emissions charge of $150 per ton of CO2-equivalent, which would add hundreds of dollars to shippers’ fuel bills for every ton of oil they burn. Others, including European Union nations, Canada and China have submitted separate documents discussing GHG pricing.

Nailing down precisely how the money will be raised, where it will ultimately go and, most importantly, what the price should be, will be tough. Back in 2022, a years-long campaign for a comparatively tiny $2 per ton levy was ultimately rejected. And Donald Trump, who previously pulled the US out of the Paris climate accord, could also be in the White House before the IMO makes its final decision.

When it comes into force, the IMO’s mechanism is set to be the planet’s first ever global, mandatory price for GHG emissions — no other discussions for any other sector are as advanced, according to Dominik Englert, a senior economist at the World Bank.

A levy isn’t the only way the IMO aims to hit its targets for decarbonizing shipping. It’s also working on regulation for a phased reduction in the GHG-intensity of ship fuel.

“The UN is on the edge of adopting the world’s first-ever global emissions price, but the policy will only be as successful as countries make it,” said Sandra Chiri, a shipping manager at the not-for-profit organization Ocean Conservancy.

© 2024 Bloomberg L.P.

Unlock Exclusive Insights Today!

Join the gCaptain Club for curated content, insider opinions, and vibrant community discussions.

Sign Up