A Key Climate Policy For Global Shipping, With Pricing Of Emissions
From 2028, all ships in the world have to either start using a less-carbon intensive fuels mix, or pay for the excess
The UN International Maritime Organization(IMO) in a sunny spring London morning on 11th April, 2025 put forward a deal for ship owners to cut their emissions or else they will face penalty. It has finally agreed on a key climate policy for global shipping, including pricing of emissions. Which sets mandatory target reductions in the shipping sector. For the first time there will be an IMO framework that will generate limited revenues for decarbonisation.
From 2028, all ships in the world have to either start using a less-carbon intensive fuels mix, or pay for the excess. A ship continuing to use conventional (fossil) bunker fuel would have to pay a $380 per tonne fee on its most intensive emissions, and $100 per tonne on remaining emissions above a lower threshold.
IMO is the specialist UN agency that regulates the global shipping industry, headquartered in London, has agreed to a carbon pricing system on global shipping, which will raise at least $10 billion per year to fund the upgrade to greener fuels. Also a new “Fuel Standard” will also start the phase out of fossil fuels from this sector, that currently uses approximately 5% of global oil demand.
The compromise is expected to raise $30-40 billion by 2030 ($10 billion per year), likely to be used to fund clean energy use on ships. However Pacific Island states say this is not enough to fund the “just an equitable transition” .
In 2023, the IMO committed to reaching net-zero greenhouse gas emissions from international shipping by 2050 and deliver up to 30% and 80% emissions reduction by 2030 and 2040 respectively. This week’s meeting was expected to set clear and binding regulations to support member states in achieving those milestones. In the end, the measure would at best deliver 10% emissions reduction by 2030, 60% by 2040 and fail to reach net-zero by 2050.The IMO has agreed on delivering on the 2023 Revised Strategy goals.
The Clean Shipping Coalition slammed IMO member states for falling far short of the UN body’s own 2030, 2040 and 2050 climate targets and failing the people and regions most vulnerable to climate change.
The T&E’s snap analysis shows that this falls short by a large margin of what is needed to incentivise clean fuels and contribute to a just and equitable transition. The current package will exempt nearly 90% of excess shipping emissions from carbon penalties via RUs. With a lack of stringent sustainability rules damaging biofuels like palm and soybean oil are likely to become the go-to option, as they will be the cheapest fuels that comply with the IMO rules.
“The compromise reached today by IMO member states is clearly not up to the challenge that awaits the shipping sector,” said Bastien Bonnet-Cantalloube, Expert on Decarbonisation of Aviation and Shipping, at Carbon Market Watch.
“The IMO is not just failing on climate—it’s actively enabling a methane lock-in,” said Elissama Menezes, Director of Equal Routes. “This week’s meeting showed that even with the heavy lifting done by small island developing nations, and least developed nations, the IMO continues to protect the status quo. The refusal to adopt a 1.5°C-aligned carbon levy that supports the world’s most vulnerable has left the least developed behind.
The writer of this article is Dr. Seema Javed, an environmentalist & a communications professional in the field of climate and energy
