The United States is threatening sanctions if the International Maritime Organization (IMO), the United Nations’ maritime branch, votes this week in London to adopt the Net-Zero Framework definitively.
This framework aims to make shipping greener through a carbon tax. Sixty-three countries have already expressed their support for the plan, including Belgium. Sixteen countries, including Russia and Saudi Arabia, are opposed, but the US is now turning up the pressure by stating that it is considering countermeasures against countries that vote in favor.
$380 per ton of CO2 equivalent
The IMO had previously adopted a step-by-step strategy to become climate neutral by 2050. For example, ships will be allowed to emit 30% less greenhouse gases by 2035. By 2040, that figure will rise to 65% These are reduction targets relative to 2008 levels.
In April, the IMO member states then reached an agreement on exactly how to proceed with the greening of shipping. More specifically, this involved a standard to limit the use of fossil fuels. Companies that do not meet this standard will pay $380 per ton of CO2 equivalent.
This money will go to a ‘Net Zero Fund’, which will be used to green the maritime sector and compensate for any adverse consequences, such as higher food prices due to more expensive shipping. Contrary to what some poorer countries had hoped, the money cannot be used in their fight against climate change.
There is also a second, more ambitious target. This is set at a 43% reduction in emissions by 2035. Various remediation options are also provided if this target is not met.
In general, the EU, which is already applying a carbon-pricing instrument on maritime emissions in its jurisdiction, has been one of the key blocs pushing for stronger measures at the IMO level.
Two-thirds majority required
This week, an Extraordinary Session of the IMO’s Marine Environment Protection Committee (MEPC 83) is scheduled to take place in London, with the final adoption of the Net-Zero Framework on the agenda.
During this session, member states will vote according to the prescribed procedure. If the required majority (2/3) is achieved, the text will be formally adopted, and the period for entry into force will approach.
Although various maritime organizations are urging support for the vote in London, the US is now undermining the vote by stating that it is considering countermeasures against countries that vote in favor. The U.S. did not participate in the April vote.
Visa restrictions or additional port fees
U.S. Secretary of State Marco Rubio and his colleagues in charge of energy and transport stated that Washington “categorically” rejects the proposal submitted to the IMO and “will not tolerate any measure that could increase costs for our citizens, our energy suppliers, our shipping companies and their customers, or our tourists.”
For the US, the economic impact of this measure could be “disastrous, with some estimates predicting an increase in global shipping costs of up to 10% or more.”
Among the sanctions being considered are visa restrictions or additional port fees for ships owned, operated, or flagged by countries that support the carbon tax.
More emissions without new policies
In 2023, global CO2 emissions from shipping totaled approximately 911 million tons. This represents approximately 2,2-2,3% of all man-made CO2 emissions per year. According to a 2022 OECD report, CO2 emissions from U.S. shipping companies’ ships amounted to approximately 50 million tons. This represents approximately 5 to 6% of global shipping emissions.
At around 880 to 950 million tons of CO2, global aviation emissions are almost equal to those from shipping. But while IMO projections expect emissions to rise to 1,1 to 1,3 billion tons of CO2 by 2050 if no new policies are introduced, aviation emissions are expected to double by then without stricter climate measures.
Most ships still run on residual oil, the waste product from refineries. HFO contains high levels of sulfur, nitrogen, and heavy metals, including vanadium and nickel. The green transition revolves around less fossil fuels and more methanol, ammonia, hydrogen, and wind support or battery-powered ships.
Another solution is slow steaming, in which ships sail more slowly (e.g., 15 knots instead of 20) and optimize their routes using AI. This can result in a 20-30% reduction in CO2.
A toss-up?
The Royal Belgian Shipowners Association, together with six partners, is calling for an agreement to be reached during the IMO vote in London this week. If not, the sector will remain a patchwork of regional rules, according to a joint statement. The partners are the other shipowners’ associations in Japan, the Netherlands, Singapore, the United Kingdom, and Norway.
According to the maritime website Splash247, a large naval bloc is currently turning against the deal. These groups include John Fredriksen of Frontline, George Economou of TMS Group, the Saudi Bahri, and thus the U.S.
It is generally assumed that the proposal has a reasonable chance of success. However, it could still be rejected or postponed if several countries abstain or vote against it under pressure from the U.S.
