In a historic move aimed at curbing the climate impact of global maritime transport, the International Maritime Organisation (IMO) has secured agreement on a sweeping new framework to slash greenhouse gas emissions (GHGs) from ships.

After intense negotiations in London, many of the world's major shipping nations have agreed to introduce a minimum charge of $100 per tonne of carbon dioxide emitted above specified thresholds, marking the first global tax of its kind on greenhouse gases (GHGs). 

The framework, which has taken years to hammer out and which still awaits formal adoption in October, is expected to take effect in 2027. Once enacted, it will apply to large ocean-going ships over 5,000 gross tonnes – responsible for around 85% of CO₂ emissions from the maritime fleet.

The system not only imposes a carbon price but also introduces a global marine fuel standard, requiring ships to progressively cut the GHG intensity of the fuel they use.

The IMO projects the levy could generate between $11bn and $13bn annually. These funds will feed into the newly established IMO Net-Zero Fund, designed to accelerate green technology adoption, assist developing countries and reward cleaner vessels.

Push, pull in negotiations

The path to consensus was anything but smooth. More than 60 countries, including Pacific island nations, had initially backed a flat emissions tax. Others – like Brazil, China, Saudi Arabia and South Africa – favoured a credit-trading scheme. Eventually, a hybrid system was agreed that includes both fixed fees and flexibility for trading surplus emissions credits between ships.

Sixty-three nations voted in favour of the compromise. Sixteen, led by Saudi Arabia, opposed the deal, while 24 – including several Pacific island states – abstained, disappointed that the outcome lacked stronger commitments.

“We came as climate vulnerable countries – with the greatest need and the clearest solution. And what did we face? Weak alternatives from the world’s biggest economies,” said Simon Kofe, Tuvalu’s Minister for Transport, Energy, Communication and Innovation, in a statement.

Some environmental groups shared these concerns. Emma Fenton of Opportunity Green said: “The IMO has made an historic decision, yet ultimately one that fails climate-vulnerable countries and falls short of both the ambition the climate crisis demands and that member states committed to just two years ago.” She warned the framework could lead to “pay-to-pollute” behaviour, undermining genuine decarbonisation.

Still, a step forward

Others saw the agreement as a vital breakthrough. “By approving a global fuel standard and greenhouse gas pricing mechanism, the International Maritime Organisation took a crucial step to reduce climate impacts from shipping,” Natacha Stamatiou of the Environmental Defence Fund, told Associated Press. “Member states must now deliver on strengthening the fuel standard over time... to ensure a just and equitable energy transition.”

IMO Secretary-General Arsenio Dominguez called the agreement “a significant step in our collective efforts to combat climate change and modernise shipping.” He acknowledged the challenges of reaching consensus but emphasised the organisation’s commitment to climate action.

In reference to the emissions fee debate, Dominguez said: “The approval of draft amendments to MARPOL Annex VI mandating the IMO net-zero framework represents another significant step.”

MARPOL Annex VI is the treaty provision governing air pollution from ships, already ratified by 108 countries representing 97% of the world’s shipping tonnage.

The US stays on the sidelines

One notable absence in the discussions was the United States. The Biden administration did not take part in the London negotiations and had previously urged other governments to oppose similar measures. Echoing the position of the earlier Trump administration, US officials expressed concerns that such economic levies would impose costs on the industry and potentially fuel inflation. They even hinted at retaliatory action if American vessels were charged.

Dominguez was asked about US opposition and made it clear: international ships must comply with IMO rules regardless of their country of origin. “Large ships travelling between countries are subject to the regulations,” he stated, urging nations with concerns to engage with the IMO directly.

Emission control zone approved

As part of the same series of meetings, delegates also approved a new emissions control area (ECA) in the North-East Atlantic. Vessels sailing in this region – including waters off the UK, Greenland, France and the Faroe Islands – will need to meet more stringent fuel and engine standards. The move, according to Clean Arctic Alliance adviser Sian Prior, will impact ships arriving from North America, Asia, and elsewhere, helping to further reduce maritime pollution.

The newly adopted scheme introduces two compliance tracks: a “base target” and a “direct compliance” route. Ships exceeding emission limits must purchase “remedial units” at set prices – $380 per tonne for base target compliance or $100 per tonne for direct compliance – between 2028 and 2030. The rates beyond 2030 are to be determined in future negotiations.

These units can also be traded or banked, allowing vessels operating below their emission limits to sell their credits to higher-emitting ships. This mechanism creates a de facto market for cleaner operations.

However, critics fear it may incentivise the continued use of transitional fuels like liquefied natural gas (LNG), which still emit GHGs. Dominguez defended LNG as a “transition fuel” but said the IMO would continue reviewing its environmental impact as part of the broader decarbonisation push.

Next steps

The draft agreement is set for a final vote in October 2025. If approved, the new rules will be binding from 2027. Shipping companies will have until then to adapt, invest in cleaner technologies and comply with the revised standards.

Shipping giant Maersk hailed the agreement as “an important step towards the first global greenhouse gas price structure for any industry,” adding that it provides vital clarity for fuel producers and ship owners planning for a decarbonised future.

The agreement is widely seen as a pivotal moment in the push to phase out fossil fuels from maritime transport, which currently accounts for about 3% of global greenhouse gas emissions. The changes indeed mark a significant turn for an industry long seen as lagging behind on climate action.