As the Trump administration dismantles climate action at home, it has demonstrated that it’s also prepared to try to derail global attempts to cut emissions.
There had been widespread optimism that members of the International Maritime Organisation (IMO) would sign off on an agreement for a global fuel standard and a global price on shipping emissions, which had been thrashed out in April.
But sustained U.S. threats of retaliatory measures, including sanctions, visa restrictions and commercial penalties, against nations supporting the proposed Net Zero Framework led to a vote to delay the decision for a year.
There is an urgency to decarbonise shipping: the industry uses dirty fuels and accounts for 3% of global emissions today, but that could rise by as much as 50% by 2050 without industry action. The challenge is exacerbated as political tensions force ships to reroute.
The IMO’s Net-Zero Framework, which has been years in the making, is intended to progressively lower permitted greenhouse gas emission intensity levels, so incentivising international shipping to switch to cleaner fuels, and adopt efficiency measures, such as speed optimisation or weather routings.
Rather than a flat levy on emissions (as many had advocated), the framework involves a ratcheting of fees for vessels that miss targets and rewards for those that adopt cleaner fuels.
Various analyses suggest the deal, which would have come into force in 2028 had it been ratified, would lead to a 10% reduction in emissions on 2008 levels by 2030, compared with the IMO’s target of “at least 20% – striving for 30%”.
In a statement following the collapse, the Maersk Mc-Kinney Moller Center for Zero Carbon Shipping said “The case for a global framework is stronger than ever”, and urged member states to use the year to advance the guidelines for action.
Many of the fine details have yet to be agreed, such as the level of rewards for first-movers, which fuels will count, clarity on the lifecycle emissions assessment of fuels and the governance and use of funding for developing nations.
E-fuel producers have also been calling on the IMO to include a specific stimulus for green hydrogen-based fuels, which are under-incentivised compared with LNG and first-generation biofuels.
A year’s delay may offer the time to resolve some of those questions, but the ability of the industry to make stable investment decisions is “massively damaged”, observes Tristan Smith, who heads University College London’s Shipping and Oceans Research Group. “It was already pretty difficult because the Net-Zero Framework was quite a hard regulation to read, but (now) its specific detail is uncertain.”
It could result in added cost to transport, he says, “which is ironic, given that those who didn’t want this to go through were apparently worried about the (cost) impacts”.
The IMO delay has ripple effects throughout supply chains, as shipping is a potentially important off taker for green hydrogen-based fuels, with its demand helping to scale the hydrogen industry and cut costs.
Another shipping fuel is green ammonia, which also requires hydrogen to manufacture, and which could be boosted by global efforts to increase demand for low-carbon fertilisers.
The Mission Possible Partnership has been tracking announced projects for clean ammonia and methanol production. Its chief executive, Faustine Delasalle, says: “As more and more companies realised that the IMO regulations could very well be passed this October, it precipitated action on the project pipeline, and that’s where, obviously, we’ll have an impact in the coming months.”
Around 100 new ammonia and methanol projects have been announced since the summer, although the tracker doesn’t break down what they’ll be used for. However, Delasalle anticipates that the IMO delay will likely have an impact on financial sign-off on some projects this year.
For now, the only regulations in place to push the industry towards cleaner fuels are the EU’s emissions trading system, which expanded to embrace shipping last year, and the FuelEU Maritime Regulation. The UK’s ETS will be extended to include shipping in 2026.
The FuelEU regulation sets gradually decreasing limits to the greenhouse gas intensity of the fuels used by large ships calling at EU ports, and applies to 100% of the energy used on intra-European voyages and 50% of energy on voyages between European ports and elsewhere in the world.
“In many ways it’s environmentally stronger than the Net-Zero Framework,” observes Alison Shaw, IMO policy manager at Transport & Environment, a green transport policy NGO.
But the EU regulation also stimulates LNG and biofuel, accelerating the risk of technology lock-in, suggests Smith of UCL. Another important element of the decarbonisation agenda is energy efficiency. The IMO has a separate regulation on vessel efficiency – measured via a carbon intensity indicator (CII) based on vessel fuel consumption data. Meeting the CII standard gets harder each year, with reductions from 2027 to 2030 meant to be agreed in 2026.
Achieving the IMO’s 2030 target of cutting emissions by at least 20% – and “striving for 30%” – “would be far more cost-effective if achieved with energy efficiency regulation”, Smith observes. Whether IMO members will now throw their weight behind tougher targets remains to be seen.
With uncertainty surrounding the IMO framework, Jesse Fahnestock, director of decarbonisation at the Global Maritime Forum, suggests government subsidies are needed to help accelerate investments, including some “creative thinking” on ways to repurpose existing funding.
For example, Norway has begun to allocate a proportion of existing subsidies for hydrogen production projects aimed at the maritime sector, and announced it will do the same for ammonia.
Another option, says Delasalle, is for governments to regulate downstream sectors such as logistics. That could help scale clean fuels beyond current voluntary commitments.
Small island states are also affected by the delay, as the money raised from the IMO Net-Zero Framework fees is intended for a fund to support a just transition, including compensating developing nations for impacts such as the increased price of food because of higher shipping costs and to support early adoption of near-zero fuels.
While some $11-12 billion is expected annually in fees, it is not enough to meet both objectives, says Marie Fricaudet, a researcher in UCL’s Shipping and Oceans Research Group.
Small island developing states and African nations had called for the fund to be in operation next year, rather than in 2029, as envisaged before this month’s delay.
Global Maritime Forum’s Fahnestock says: “The (just transition) funding is not just important from (an) equity and justice perspective, it’s also important from a political perspective… Impacted countries need to know that it’s going to be meaningful to get them on board.” As nations ponder the fall-out from October’s meeting, Pacific Island states are left to reflect that their very survival depends on global action. Source: By Angeli Mehta, Reuters
