With relatively little fanfare, the world’s first-ever carbon tax was poised to be officially adopted as an international agreement this year.
The International Maritime Organization, or IMO, the United Nations agency that oversees global shipping, has developed a net-zero emissions framework to shift the sector toward cleaner fuels — a crucial step in the energy transition, since the industry that runs about 90 percent of global trade also accounts for 3 percent of global emissions.
The framework would require shippers to pay a fee per ton of greenhouse gas emissions if their emissions exceed a certain threshold. The fees would then be pooled into a fund and distributed to support the development and adoption of alternative fuels and decarburization in developing countries. The shipping industry, which sought a consistent regulatory environment and a level playing field, largely supported the plan. The same was true for the vast majority of UN member countries.
Then, in April, the Trump administration abruptly withdrew from negotiations with the IMO. As the vote on the framework approached this month, the administration began pressuring other countries to abandon the deal. The administration also issued a statement warning that the United States was considering additional tariffs, visa restrictions, additional port fees and sanctions against officials from countries that voted for the framework. President Trump himself spoke on Truth Social, calling the proposal “a new global green tax on shipping.”
The campaign was successful. Last week, at the end of negotiations, Saudi Arabia abruptly called a vote to postpone the IMO meeting for a year without making a decision on the net-zero emissions framework. Since IMO rules require a call for postponement to precede any other consideration, the proposed postponement was immediately voted on and adopted by 57 countries in favor and 49 against. (Twenty-one countries abstained in the vote.) That means it will be at least another year before the framework can be officially signed.
Close observers of IMO decarbonization efforts told Grist that U.S. obstruction was a deciding factor in preventing the framework from being adopted.
“It’s fair to say that the retaliatory measures and punitive threats that were shared by the U.S. administration ahead of the meetings played their role,” said Em Fenton, senior director of Opportunity Green, a U.K.-based climate group that is closely following the IMO negotiations. “Last week’s outcome is a devastating blow to climate multilateralism. »
The IMO has been working to adopt rules on emissions for several years, but efforts intensified in 2023 when the agency’s 176 member countries agreed to a greenhouse gas strategy that would commit them to reaching net zero emissions by around 2050. a levy or trading mechanism for carbon emission rights.
Economically, the countries were divided. An ambitious coalition of more than 64 countries, including European Union countries, the United Kingdom, Pacific and Caribbean countries, and African countries, has proposed a relatively high flat tax on all maritime emissions. Under their proposal, each ton of greenhouse gas emissions would be priced at the same level across the board. Another group of countries, led by China, however, favored a carbon trading mechanism that would allow countries to offset their emissions with carbon credits. (China and other emerging economies are big exporters, and a flat tariff they say would hurt businesses and reduce their competitiveness.)
Ultimately, countries reached a compromise with a two-tier system: large emitters in the first tier could engage in carbon trading to some extent. Those at the lower tier would pay the levy based on a fee per tonne of emissions. And those who comply with zero or near-zero emissions fuel requirements will receive financial rewards. This approach became the net zero emissions framework that was to be voted on this year.
The shipping industry has largely welcomed this framework. On the one hand, the industry has seen record profits in recent years. A report from Opportunity Green found that 139 of the world’s largest shipping companies, which represent more than 90% of the global fleet, made $340 billion in profits between 2019 and 2023. The 10 largest companies were effectively taxed at less than 10% on average – far lower than the average global corporate tax rate of 21.5%.
The industry was also hungry for regulatory certainty. Ahead of last week’s meeting, a group of trade organizations representing the shipping industry released a statement calling for adoption of the framework. “Only global rules will decarbonize a global industry,” they noted. “Without this framework, shipping would risk finding itself facing a growing patchwork of unilateral regulations, increasing costs without effectively contributing to decarbonization. »
With the framework now under threat, the path forward is unclear. Even though shipping negotiations won’t resume for another year, Fenton said countries should push for more technical clarity at further interim meetings to build consensus and ensure the framework is adopted next year.
At the same time, cities and ports around the world have taken steps to make their infrastructure greener. Alisa Kreynes, ports and shipping program director at C40, a global network of mayors taking action for climate, highlighted various initiatives already underway to reduce carbon emissions from the shipping industry. Cities have built green maritime corridors, which are trade routes where ports and other partners work together to transition to zero or near-zero emissions fuels. Ports also began setting stricter emissions standards for trucks and supported the development of offshore wind power.
“The way we respond is for cities to continue to ensure a just maritime transition, despite what happened at the IMO last week,” Kreynes said. “Cities will continue to advance the equitable decarbonization of ports and shipping. »
But these measures will not significantly reduce the industry’s main source of emissions, the huge, fuel-guzzling ships that crisscross the world delivering goods. And the failure of the IMO negotiations sounds like a warning about the fragility of international cooperation. The momentum could continue at COP30, the international climate conference to be held in Belém, Brazil, next month.
“The type of strategy of delay and obfuscation is more likely to be on the table and visible at COP30 than it would have been if it had not prevailed here at the IMO,” Fenton said. “And it’s extremely disappointing.”
