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IMO Strikes Deal on Fuel Emissions, Carbon Fees

[ April 22, 2025   //   ]

Countries in the United Nations’ International Maritime Organization struck a deal April 11 in London on a global fuel emission standard for the maritime sector that will wield a stick against violators and a carrot for vessels burning cleaner fuels, Reuters reported.

A majority of countries approved the carbon-curbing measures to help meet the IMO’s target to cut net emissions from international shipping by 20 percent by 2030 and eliminate them by 2050.

It passed despite the U.S. pulling out of the IMO climate talks and urging other countries to do the same, and threatening imposing “reciprocal measures” against any fees charged on U.S. ships.

Under the scheme, starting 2028 ships will be charged a penalty of US$380 per tonne on every extra ton of CO2 equivalent they emit above a fixed emissions threshold, plus a penalty of USUS$100 a ton on emissions above a stricter emissions limit.

Countries still need to give final approval at an IMO meeting in October.

The talks exposed rifts between governments over how fast to push the maritime sector to cut its environmental impact, Reuters’ report said.

A proposal for a stronger carbon levy on all shipping emissions, backed by the European Union and Brazil as well as “climate-vulnerable Pacific countries,” sputtered when it drew opposition from China, Brazil and Saudi Arabia and several other countries, as climate-vulnerable Asian countries, delegates told Reuters.

The deal is expected to generate up to US$40 billion in fees from 2030, some of which will go towards making expensive zero-emission fuels more affordable.

In 2030, the main emissions limit will require ships to cut the emissions intensity of their fuel by 8 percent compared with a 2008 baseline, while the stricter standard will demand a 21 percent reduction.

By 2035, the main standard will cut fuel emissions by 30 percent, and 43 percent for the stricter standard.

Ships that reduce emissions to below the stricter limit will be rewarded with credits that they can sell to non-compliant vessels.

‘Meaningful Step’

The IMO’s deal drew a spectrum of responses across member states, lobbies and campaign groups.

The European Commission saw the deal as a “meaningful step” towards achieving the goals of the Paris Agreement on climate change, though it fails to show the sector’s full compliance.

Britain Transport Minister Heidi Alexander said the deal would incentivize emission reductions and drive forward the development of clean fuels.

But, Ralph Regenvanu, climate minister of Vanuatu said countries had “failed to support a set of measures that would have gotten the shipping industry onto a 1.5°C (2.7 degrees Fahrenheit) pathway,” which is the level of global warming scientists say would avert the most damaging consequences.

International shipping lacks available volumes of zero-emission fuels, such as green ammonia and methanol, but initially ships will be able burn LNG and biofuels to comply with the new rules, analysts say.

The International Chamber of Shipping welcomed the deal: “Governments have understood the need to catalyze and support investment in zero emission fuels.” The ICS predicts a scaling up of production of new fuels.

But campaign group Opportunity Green said there was a risk the IMO’s agreement would lock in the use of crop-based first-generation biofuels and LNG, which is not carbon-free.

“The sector’s only credible path to net zero that doesn’t compromise biodiversity is green hydrogen e-fuels,” said Aoife O’Leary, head of Opportunity Green.

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