This year marked a significant moment in the fight against climate change as the first global carbon tax was set to be formally accepted as an international treaty.
The International Maritime Organization (IMO), a United Nations body responsible for regulating maritime affairs, had put together a net-zero framework aimed at transitioning the shipping sector toward cleaner fuel options—an essential move in the global shift toward sustainable energy. This industry, vital for about 90 percent of international trade, is responsible for approximately 3 percent of global emissions.
Under the proposed framework, shipping companies would incur a fee for each ton of greenhouse gas emissions exceeding a defined threshold. These funds would be collected into a fund to aid the development and adoption of alternative fuels as well as support decarbonization efforts in developing nations. The shipping sector, which has sought a stable regulatory environment, expressed broad support for this initiative, as did the majority of U.N. member states.
However, in April, the Trump administration suddenly exited negotiations with the IMO. As a vote on the framework neared this month, the administration started applying pressure on other countries to back away from the agreement. Furthermore, the administration issued a warning indicating that it was considering imposing further tariffs, visa limitations, additional port fees, and penalties on officials from countries that supported the framework. President Trump also criticized the proposal as a “global green new scam tax on shipping” via Truth Social.
This campaign proved effective. Recently, as discussions were winding down, Saudi Arabia unexpectedly proposed a vote to postpone the IMO meeting for a year without reaching a decision on the net-zero framework. Since the IMO’s procedures dictate that a call for adjournment takes precedence over all other discussions, this motion was voted on immediately and passed with 57 countries in favor, while 49 opposed it. (Twenty-one nations abstained.) Consequently, the framework will not be finalized for at least another year.
Insiders following the IMO’s decarbonization initiatives told Grist that U.S. intervention was a critical element in halting the framework’s progress.
“It’s fair to say the retaliatory measures and threats from the U.S. administration prior to the meetings were influential,” remarked Em Fenton, senior director at Opportunity Green, a climate advocacy group based in the U.K. “Last week’s outcome is a severe setback for climate multilateralism.”
The IMO’s pursuit of emissions regulations has been gradual over several years, intensifying in 2023 when its 176 member nations agreed on a greenhouse gas strategy aiming for net-zero emissions by around 2050. In pursuit of this objective, discussions began on legally binding regulations, which included a standard to cap the carbon intensity of fuels used by shipping companies, supplemented by an economic measure to enforce compliance, potentially through a levy or carbon trading scheme.
On this economic front, member countries were divided. A determined coalition of over 64 nations, including those from the European Union, the United Kingdom, Pacific and Caribbean nations, and several African countries, proposed a uniform flat tax on all shipping emissions. This proposal emphasized a consistent pricing model across the board. Conversely, a group of nations led by China advocated for a carbon trading system that would enable countries to offset emissions through carbon credits. They contended that a flat fee would disadvantage businesses and impair their competitiveness.
Ultimately, member states reached a compromise that established a two-tier system: high emitters in the upper tier were allowed a degree of carbon trading, while those in the lower tier would pay a levy based on the tonnage of their emissions. Entities complying with zero or near-zero emissions fuel requirements were to receive financial incentives. This framework was intended to be voted on this year.
The shipping sector largely welcomed this framework, bolstered by record profits in recent years. A report from Opportunity Green indicated that 139 of the world’s largest shipping firms, which account for over 90 percent of the global fleet, generated $340 billion in profits between 2019 and 2023. The leading ten corporations faced effective tax rates below 10 percent, significantly lower than the global corporate tax average of 21.5 percent.
Additionally, the industry was eager for regulatory clarity. Prior to the recent meeting, a coalition of shipping trade associations issued a statement urging the framework’s approval. “Only global regulations can achieve decarbonization in a global industry,” they asserted. “Without this framework, shipping faces the risk of a fragmented landscape of unilateral regulations, increasing operational costs without compelling decarbonization outcomes.”
With the framework’s future now uncertain, the direction ahead is ambiguous. Although formal talks in the shipping sector won’t restart for another year, Fenton proposed that countries aim for greater technical clarity during interim meetings to reach a consensus and ensure the framework’s ratification next year.
Meanwhile, cities and ports globally are making strides to enhance their infrastructure sustainably. Alisa Kreynes, a director of the ports and shipping program at C40—a global coalition of climate-conscious mayors—pointed out various initiatives underway to cut carbon emissions in the shipping industry. There have been the establishment of green shipping corridors, trade routes where ports collaborate to transition to zero or near-zero emissions fuels. Furthermore, ports are imposing stricter emission standards for trucks and promoting the development of offshore wind power.
“Our response is that cities will persist in their commitment to a just maritime transition, notwithstanding the recent events at the IMO,” Kreynes said. “Cities will continue advancing equitable decarbonization efforts in ports and shipping.”
However, these initiatives alone are unlikely to substantially reduce emissions from the primary pollutant: the huge, fuel-intensive vessels that transport goods around the world. The breakdown of discussions at the IMO serves as a stark reminder of the precarious nature of international collaboration. Similar dynamics may surface at COP30, the upcoming global climate conference scheduled to take place in Belém, Brazil, next month.
“The tactics of delay and obstruction are more likely to be present at COP30 than they would have been had the conditions not persisted at the IMO,” Fenton remarked. “This is tremendously disheartening.”
