A Global Carbon Price on Shipping: A Step Towards Zero-Emissions by 2050

The International Maritime Organization (IMO) is currently in the process of negotiating a global carbon price on shipping, marking a significant milestone as the world’s first global carbon pricing initiative on any sector. This move is part of the IMO’s commitment to achieve zero-emissions by 2050 through equitable measures.

During the recent technical working group ISWG-GHG-19 meeting from March 31 to April 1, 2025, significant progress was made towards finalizing a carbon price on global shipping, with the aim of formalizing the agreement at the upcoming climate summit (MEPC 83).

As part of its emission reduction targets of 30% by 2030, 80% by 2040, and ultimately zero emissions by 2050, the IMO has proposed adopting both an ‘economic’ measure based on greenhouse gas (GHG) emission pricing and a ‘technical’ measure in the form of a global fuel standard (GFS).

Implementing a carbon price on shipping would help bridge the price gap between fossil fuels and renewable energy sources, while also generating revenues to support a fair and just transition towards sustainable practices in the industry.

One of the key developments in the negotiations is the integration of the carbon pricing levy with the GFS, creating a single policy mechanism that combines both economic (carbon pricing) and technical (fuel standard) elements. This unified approach would require all ships to pay for their greenhouse gas emissions, thereby incentivizing the adoption of green energy and fuels across the industry.

While countries like China and India have shown openness to the idea of stable revenue generation through the revised GFS, there are concerns about the level of ambition in the overall policy design. The EU, for instance, has been criticized for not fully supporting a more ambitious levy proposal, opting for a weaker revenue generation target.

Representatives from Pacific, Latin American, Caribbean, and African countries, with the backing of the UK, are advocating for a robust levy within the new policy framework to ensure equity and ambition in the transition to decarbonization. They emphasize the need to protect the most vulnerable nations and ensure no one is left behind in this global effort.

Experts and advocates in the field of climate diplomacy and renewable energy stress the importance of adopting a comprehensive measure that closes the cost gap between fossil fuels and sustainable alternatives, setting the shipping sector on a path towards a just and equitable transition for all stakeholders.

As discussions continue, it is essential for delegates to maintain a focus on achieving high levels of ambition and solidarity with climate vulnerable countries to secure effective decarbonization measures and a fair energy transition. The adoption of a robust levy framework, paired with a stringent fuel standard, is seen as crucial in achieving these goals.

According to a study by UNCTAD commissioned by the IMO, a levy ranging from $150 to $300 per tonne of greenhouse gas emissions, if properly designed, is deemed the most effective approach to minimize the economic impacts of shipping decarbonization on global GDP growth and promote economic equality on a global scale.