New Pact Would Require Ships to Cut Emissions or Pay a Fee

A draft global agreement sets a fee for cargo ships, which carry the vast majority of world trade, to pay for their greenhouse gas emissions.

· A draft accord reached in London under the auspices of the International Maritime Organization, a United Nations agency, would require every ship that ferries goods across the oceans to lower their greenhouse gas emissions or pay a fee.

· United States pulled out of the talks

· Ships mostly run on heavy fuel oil, sometimes called bunker fuel and more than 80 percent of global goods move by ships. The industry accounts for around 3 percent of global greenhouse emissions, comparable to the emissions from aviation.

· Ships using conventional shipping oil would have to pay a higher fee ($380 per metric ton of carbon dioxide equivalent produced) while ships that use a less carbon-intensive fuel mix would have to pay a lower fee ($100 for every metric ton that exceeds the fuel standard threshold).

· Developing countries with maritime fleets said they would be unfairly punished because they have older fleets. Countries like Saudi Arabia, which ship huge quantities of oil, and China, which exports everything from plastic toys to electric cars worldwide, balked at proposals to set a higher price

· Countries that voted in favor of the compromise agreement included China and the European Union. Saudi Arabia and Russia voted against it. The United States pulled out of the talks entirely.

[ABS News Service/12.04.2025]

Amid the turmoil over global trade, countries around the world reached a remarkable, though modest, agreement Friday to reduce the climate pollution that comes from shipping those goods worldwide — with what is essentially a tax, no less.

A draft accord reached in London under the auspices of the International Maritime Organization, a United Nations agency, would require every ship that ferries goods across the oceans to lower their greenhouse gas emissions or pay a fee.

The targets fall short of what many had hoped. Still, it’s the first time a global industry would face a price on its climate pollution no matter where in the world it operates. The proceeds would be used mainly to help the industry move to cleaner fuels. It would come into effect in 2028, pending approval by country representatives, which is widely expected.

The agreement marks a rare bit of international cooperation that’s all the more remarkable because it was reached even after the United States pulled out of the talks earlier in the week. No other countries followed suit.

“The U.S. is just one country and that one country cannot derail this entire process,” said Faig Abbasov, shipping director for Transport and Environment, a European advocacy group that has pushed for measures to clean up the maritime industry. “This will be first binding decision that will force shipping companies to decarbonize and switch to alternative fuels.”

The agreement applies to all ships, no matter whose flag they fly, including ships registered in the United States, although the vast majority of ships are flagged in other countries. It remained unclear whether or how Washington might respond to the fee agreement.

Officials at the State Department didn’t immediately respond to a request for comment.

Ships mostly run on heavy fuel oil, sometimes called bunker fuel and more than 80 percent of global goods move by ships. The industry accounts for around 3 percent of global greenhouse emissions, comparable to the emissions from aviation.

The agreement reached Friday is far less ambitious than one initially proposed by a group of island nations who had suggested a universal assessment on emissions.

After two years of negotiations, the proposal sets out a complicated two-tiered system of fees. It sets carbon intensity targets, which are like clean-fuel standards for cars and trucks. Ships using conventional shipping oil would have to pay a higher fee ($380 per metric ton of carbon dioxide equivalent produced) while ships that use a less carbon-intensive fuel mix would have to pay a lower fee ($100 for every metric ton that exceeds the fuel standard threshold).

The threshold would get stricter over time. It could allow the industry to switch to biofuels to meet the standards. That is a contentious approach, since biofuels are made from crops, and growing more crops to make fuel could contribute to deforestation.

The new shipping-fuel standards are meant to spur the development of alternative fuels, including hydrogen.

There were objections from many quarters. Developing countries with maritime fleets said they would be unfairly punished because they have older fleets. Countries like Saudi Arabia, which ship huge quantities of oil, and China, which exports everything from plastic toys to electric cars worldwide, balked at proposals to set a higher price, according to people familiar with the negotiations.

“They turned away a proposal for a reliable source of revenue for those of us in dire need of finance to help with climate impacts,” said Ralph Regenvanu, the climate minister for Vanuatu, in a statement after the vote.

In the end, countries that voted in favor of the compromise agreement included China and the European Union. Saudi Arabia and Russia voted against it.

The United States pulled out of the talks entirely.

The global shipping industry agreed in 2023 to eliminate greenhouse gas emissions by around 2050. Last year, it followed up on that commitment with a more concrete plan, taking the first steps toward establishing an industrywide carbon price.

Projections by the International Chamber of Shipping, an industry body, found that it would have a negligible effect on prices. “We want an industry regulation and a level playing field so we can get on with business,” said Stuart Neil, a spokesman for the chamber. “It’s a global industry. You need global regulations.”