ICS – In a pivotal move towards achieving net-zero greenhouse gas (GHG) emissions from international shipping by 2050, the International Chamber of Shipping (ICS) has collaborated with 47 governments to propose a groundbreaking maritime greenhouse gas (GHG) emissions pricing mechanism. This proposal was submitted as part of the final round of negotiations under the United Nations’ International Maritime Organization (IMO). The goal is to establish a mechanism that will mandate shipping companies to contribute to a new multi-billion-dollar fund to reduce GHG emissions from shipping.
Supported by major global shipping nations including Greece, Japan, Korea, and the United Kingdom, as well as prominent flag States such as the Bahamas, Liberia, the Marshall Islands, and Panama, this joint proposal sets out regulatory amendments to the IMO MARPOL Convention. The aim is to implement an annual mandatory GHG contribution based on the amount of CO2e emitted by ships. The revenue generated from these contributions will fund the creation of the “IMO GHG Strategy Implementation Fund,” which is designed to support the uptake of zero/near-zero emission (ZNZ) marine fuels.
The key purpose of this pricing mechanism is to bridge the cost gap between ZNZ fuels, such as green methanol, ammonia, and hydrogen, and conventional marine fuels. By doing so, it will incentivize the widespread adoption of clean marine fuels and accelerate the transition towards a decarbonized shipping industry. This initiative is set to support the global maritime community’s goal of net-zero emissions by 2050.
The funds generated from this mandatory contribution will not only drive the transition to cleaner energy sources but also provide financial support to developing countries, ensuring their participation in GHG reduction efforts. It is expected that this initiative will result in billions of dollars annually for GHG reduction initiatives, which will play a vital role in global climate action.
International Chamber of Shipping Secretary General, Guy Platten, expressed strong support for the adoption of a GHG pricing mechanism, emphasizing its importance in achieving the IMO’s ambitious emission reduction goals. “The industry fully supports the adoption of a GHG pricing mechanism for global application to shipping. The joint text put forward by this broad coalition is a pragmatic solution and the most effective way to incentivize a rapid energy transition in shipping,” said Platten. “We are very pleased that such a large and diverse group of nations now firmly supports a common approach to maritime carbon charging.”
Despite broad support for a universal flat-rate GHG contribution, some governments have expressed concerns. The ICS is working closely with all IMO Member States to address these concerns and reach an agreement during the final stages of the negotiations.
If the proposed MARPOL amendments are approved by IMO Member States in April 2025, the global implementation of the GHG pricing mechanism is expected to begin in early 2027. This would initiate the collection of annual GHG contributions from ships starting in 2028, marking a significant step forward in the global maritime industry’s efforts to combat climate change.
The quantum of the GHG contribution per tonne of CO2e emitted is still to be finalized but is anticipated to range between USD 60 and USD 300 per tonne of conventional marine fuel consumed. This amount will depend on the reward rate for ZNZ marine fuels and the allocation of funds to support developing countries.
The proposal is co-sponsored by a broad coalition of countries, including Austria, Bahamas, Belgium, Croatia, Cyprus, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Jamaica, Japan, Kenya, Latvia, Liberia, Lithuania, Malta, Netherlands, Panama, Poland, Portugal, South Korea, Spain, Sweden, United Kingdom, and the European Commission, among others.
This proposal is set to be considered at the IMO’s critical meeting in February 2025, with the final decision expected in April 2025. If adopted, this pricing mechanism will play a crucial role in the transition to a sustainable maritime future, driving the global shipping industry towards a cleaner and more environmentally responsible era.
About International Chamber of Shipping (ICS)
The International Chamber of Shipping (ICS) is the principal global trade association for merchant shipowners and operators, representing over 80% of the world’s merchant fleet across all sectors and trades. ICS plays a leading role in advocating for the shipping industry on environmental issues, including GHG emissions, and works closely with governments and international organizations to shape policies that benefit the global maritime community.