GHG pricing mechanism proposal

Global collaboration on proposed pricing mechanism

A total of 47 countries including four from Africa together with the International Chamber of Shipping have submitted a maritime greenhouse gas (GHG) emissions pricing mechanism for international shipping to the final round of negotiations at the United Nations’ International Maritime Organisation (IMO).

The new proposal aims to achieve net-zero goal by reducing price gap and incentivising uptake of zero/near-zero emission (ZNZ) marine fuels; and outlines a proposal for annual contribution by ships, per tonne of GHG emitted.

If fit-for-purpose regulations are approved by IMO Member States in April 2025, maritime GHG emissions pricing mechanism should enter into force globally in early 2027.

The joint text is supported by major shipping nations such as Greece, Japan, Korea and the United Kingdom, the world’s largest flag States including Bahamas, Liberia, Marshall Islands and Panama, all EU States (and the European Commission), other African countries such as Nigeria and Kenya, plus Small Island Developing States from the Caribbean and the Pacific.

The joint submission by governments sets out convergent regulatory text for amendments to the IMO MARPOL Convention, which will require shipping companies operating ships on international voyages to make GHG contributions per tonne of CO2e emitted to a new “IMO GHG Strategy Implementation Fund”. 

The key purpose of this mandatory GHG charge will be to reduce the cost gap between zero/near-zero GHG emission (ZNZ) fuels (such as green methanol, ammonia and hydrogen) and conventional marine fuels, to incentivise the accelerated uptake of green energy sources. Revenue generated will be used to reward the production and uptake of ZNZ fuels, whilst also providing billions of US dollars annually to support the maritime GHG reduction efforts of developing countries.

 “This proposed joint text has been hard fought and is broadly based on ideas which ICS has been advocating for the past ten years,” notes International Chamber of Shipping Secretary General, Guy Platten explaining that the industry fully supports the adoption by IMO 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 incentivise a rapid energy transition in shipping to achieve the agreed IMO goal of net zero emissions by or close to 2050. We are very pleased that such a large and diverse group of nations now firmly supports a common approach to maritime carbon charging.

“While a large number of governments now support a universal flat rate GHG contribution by ships – or something similar – a minority of governments continue to have concerns. Working in co-operation with all IMO Member States we will do our best to allay such concerns during the final stages of these critical negotiations about regulatory text.”

This mature regulatory proposal will be considered by a critical IMO meeting in February (in the week of 17 February 2025 at ISWG-GHG 18). If the MARPOL amendments are approved by IMO in April 2025, they should enter into force globally in early 2027, with the collection of annual GHG contributions from ships commencing in 2028.

The joint proposal to IMO for a maritime GHG emissions pricing mechanism can be found here.

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