The International Maritime Organization (IMO), a UN agency responsible for regulating maritime transport, has made a significant move towards reducing carbon emissions from ocean shipping. After a weeklong meeting, countries have voted to implement binding carbon reduction targets, which include a global cap on emissions and penalties for entities that exceed that limit.
This decision follows the IMO’s previous shift to lower-sulfur fuels in 2020, addressing the high levels of sulfur dioxide emissions emitted by large ships. The new agreement sets standards for greenhouse gas intensity from maritime shipping fuels, with targets starting in 2028 and gradually reducing through 2035. The ultimate goal is to achieve net-zero emissions in shipping by 2050.
Companies that exceed the carbon limits will face penalties of either $100 or $380 per excess ton of emissions, in line with the social cost of carbon. The funds collected from these penalties will be used to reward lower-emission ships, support research into cleaner fuels, and assist nations vulnerable to climate change.
The implementation of a global carbon price is a significant step in addressing the negative externality of pollution in the shipping industry. Economists have long advocated for carbon pricing to properly internalize the costs of pollution and incentivize emissions reductions.
While the agreement represents a historic first in the industry, there is still work to be done to ensure greener technologies are readily available to meet the targets. Jesse Fahnestock, Director of Decarbonisation at the Global Maritime Forum, emphasized the need for immediate investments in green fuel technology and infrastructure to achieve the goals.
The IMO’s “green corridors” initiative aims to establish net-zero-emission shipping routes ahead of the 2050 target. This agreement sets an example for other industries to follow suit with their own carbon pricing mechanisms to drive down emissions.
Overall, the move by the IMO towards reducing carbon emissions in the shipping industry is a positive step towards combating climate change. It sets a precedent for other sectors to take similar actions and emphasizes the importance of global cooperation in addressing environmental challenges.
