The International Chamber of Shipping Joins Governments in Push for Maritime GHG Emissions Pricing Mechanism

The International Chamber of Shipping (ICS) has joined forces with 47 governments in a united effort to advocate for the adoption of a maritime greenhouse gas (GHG) emissions pricing mechanism for international shipping. This joint submission was made to the final round of negotiations at the United Nations’ International Maritime Organization (IMO).

The joint submission, which is backed by major shipping nations like Greece, Japan, Korea, and the United Kingdom, as well as the world’s largest flag states including Bahamas, Liberia, Marshall Islands, and Panama, seeks to introduce amendments to the IMO MARPOL Convention. These amendments would require shipping companies operating ships on international voyages to make GHG contributions per tonne of CO2e emitted to a new “IMO GHG Strategy Implementation Fund.”

The primary objective of this mandatory GHG charge is to narrow the cost difference between zero/near-zero GHG emission fuels (such as green methanol, ammonia, and hydrogen) and conventional marine fuels, thereby incentivizing the rapid adoption of green energy sources.

The revenue generated from these contributions would be utilized to incentivize the production and use of zero/near-zero GHG fuels, while also providing financial support to developing countries for their maritime GHG reduction efforts.

While the exact amount of the GHG contribution per tonne of CO2e emitted is yet to be finalized by IMO Member States, it is expected to range from $60 to up to $300 per tonne of conventional marine fuel oil consumed. This range will depend on the agreed reward rate for zero/near-zero GHG marine fuels and the annual revenue allocation for supporting developing countries.

“The industry fully supports the adoption of a GHG pricing mechanism by IMO for global application to shipping. The joint text proposed by this coalition is a practical solution and the most effective way to drive a swift energy transition in shipping towards achieving the net zero emissions goal by 2050,” said Guy Platten, Secretary General of the International Chamber of Shipping.

“We are delighted to see a broad and diverse group of nations backing a unified approach to maritime carbon charging. This proposed joint text, which has been the result of extensive collaboration, aligns closely with the principles that ICS has been advocating for over the past decade.”

While the majority of governments now support a universal flat rate GHG contribution by ships, there are still some concerns from a minority of governments. ICS is committed to working with all IMO Member States to address these concerns in the final stages of the negotiations on regulatory text,” Platten added.

This comprehensive regulatory proposal will be deliberated during a crucial IMO meeting in February 2025. If the MARPOL amendments are approved by IMO in April 2025, they are expected to come into effect globally by early 2027, with the collection of annual GHG contributions from ships commencing in 2028.

It is noteworthy that the European Union had introduced a carbon levy mechanism for shipping ahead of IMO. Since January 1, 2024, shipping has been included in the EU Emissions Trading System (EU ETS), which imposes an annual absolute limit on emissions of certain GHGs and mandates the purchase of allowances for emissions. As of the beginning of 2024, the EU ETS has been expanded to cover CO2 emissions from all large ships entering EU ports, irrespective of their flag.