After 10 years of discussions, the International Maritime Organization (IMO) member nations have agreed to implement the first global carbon fee for shipping, marking it as the first UN-administered carbon revenue system. Delegates at the Marine Environment Protection Committee’s 83rd meeting established binding targets for shipping’s greenhouse gas emissions, including a 20-30 percent reduction by 2030, a 70-80 percent reduction by 2040, and net-zero emissions by or around 2050.
To incentivize compliance, a tiered system of fees and compliance levels was adopted, featuring a $380 per tonne of CO2 penalty for ships exceeding a maximum emissions intensity level, which will become stricter over time. Ships meeting the intensity standard will pay $100 per tonne of CO2 for emissions above a second “direct compliance” level, while those emitting less than this level will receive carbon credits. Notably, only emissions above a certain limit are taxed, and all ships under 5,000 GT are exempt.
While the framework allows operators to use alternative fuels, including first-generation biofuels, concerns have been raised about their environmental impact. Climate advocates and industry groups acknowledge that the fee structure may not immediately drive a full transition to high-cost green fuels, but analyses suggest a substantial reduction in emissions from around 2030 onward. The agreement has drawn mixed reactions, with some criticizing its ambition and others viewing it as a necessary first step, emphasizing the need for continued progress and investment in greener shipping solutions.