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Carbon pricing on track despite US stance on green initiatives : IMO

President Trump on Jan . 20 withdrew the US from of the Paris climate agreement for a second time . Shutterstock . com

By Greg Knowler

Progress toward rolling out a fuel standard and carbon pricing mechanism for global shipping by this October will not be derailed by Donald Trump ’ s skeptical view on environmental initiatives , according to the International Maritime Organization ( IMO ).

An IMO spokesperson , asked if the US representative to the UN body would continue to support the IMO ’ s emissions-cutting measures , said “ all member states ” have been part of discussions on the midterm measures to reduce greenhouse gas ( GHG ) emissions .

That comes as Trump , just hours after returning to the White House on Jan . 20 , signed an executive order to begin the process of pulling the US out of the Paris Agreement climate change treaty . Trump also withdrew the US from the accord during his first term as president in 2017 , but the move was reversed by Joe Biden in 2021 .

“ All IMO member states have committed to playing their part .”

“ All IMO member states have committed to playing their part to meet our shared objectives , and we continue to work together with all our members ,” the spokesperson told the Journal of Commerce this week .

The member nations of the IMO have already agreed to include a GHG emissions pricing mechanism as part of the IMO Strategy for the Reduction of GHG Emissions that was adopted in 2023 .

“ The discussions now are on the details of what such a mechanism will take ... this includes a timeline for implementation , which we remain confident we can achieve ,” the IMO spokesperson said .

Most decisions at the IMO are taken by consensus that requires a wide agreement with no , or limited , objections . The spokesperson said the midterm GHG reduction measures will be adopted via amendments to the International Convention for the Prevention of Pollution from Ships ( MARPOL , Annex VI ) and will require a two-thirds majority of all parties signed up to the convention , which is most member states .

But the timeline is under pressure . Legal text for the midterm measures must be thrashed out and approved at the IMO ’ s next Marine Environment Protection Committee

( MEPC ) meeting in April to allow the fuel standard and pricing mechanism to be implemented in October if the maritime industry is to have any hope of achieving its 2030 interim emissions targets .

Narrowing the price gap

The key issue is that the price differential between fossil fuels and sustainable alternatives is far too wide to make investment in green fuel production and infrastructure attractive ; the proposals currently under discussion are aimed at narrowing the price gap and accelerating investment in alternative fuels .

There is strong support from shipowners for an economic measure to take the form of a carbon levy that will be used to build up a multi-billion-dollar global fund aimed at reducing the cost gap . The World Shipping Council ( WSC ) has proposed its own green balance mechanism , while another proposal is for a “ feebate ” system under which all ships emitting GHGs pay a levy that is used to subsidize zero-emission fuels and energy sources .

The EU decided it could not wait for the IMO and included shipping in its cap-and-trade Emissions Trading System from Jan . 1 last year . But that is the kind of regional approach to cutting emissions the IMO is anxious to avoid . Whatever pricing mechanism is decided this year , the IMO spokesperson said rolling it out across the maritime industry as a binding global measure is the only way forward .

“ Shipping is global , which requires robust global regulations that will support free and fair world trade and ensure a level playing field for all ,” the spokesperson said .

email : greg . knowler @ spglobal . com

52 Journal of Commerce | March 3 , 2025 www . joc . com