IMO Approves Global Carbon Pricing for Shipping Industry Amid U.S. Opposition

The International Maritime Organization (IMO) has approved a global carbon pricing mechanism for the shipping industry, marking a significant step toward reducing greenhouse gas emissions. The agreement, reached in April 2025, introduces financial penalties for ships exceeding emission thresholds, aiming to incentivize cleaner technologies and align the sector with global climate goals.​

Under the new regulations, set to take effect in 2028, ships emitting beyond set limits will incur fees starting at $100 per excess ton of carbon dioxide, potentially rising to $380. The initiative includes a carbon trading system, allowing companies to buy and sell emission credits, thereby promoting operational efficiency and the adoption of cleaner fuels. The IMO estimates that the scheme could generate annual revenues between $10 billion and $13 billion, primarily to be reinvested within the shipping industry to support the transition to low-carbon technologies. 

Despite the historic nature of the agreement, the measures have faced criticism for lacking the ambition necessary to meet global climate targets. Analysts project only an 8% reduction in emissions by 2030, falling short of the IMO's 20% target. The compromise emerged after resistance from major fossil fuel-producing nations, including China, Brazil, and Saudi Arabia, leading to the abandonment of a more robust carbon levy proposed by climate-vulnerable countries. 

Notably, the United States abstained from the negotiations, citing economic concerns and potential inflationary impacts. A leaked document revealed that the U.S. warned of possible "reciprocal measures" against countries supporting the levy, aligning itself with other opposing nations. ​

The agreement also establishes a marine fuel standard aimed at gradually adopting cleaner fuels to achieve net-zero emissions in the shipping industry by 2050. Ships emitting below stricter thresholds can trade credits with higher-emitting vessels, creating financial incentives for exceeding emission reduction targets. While the European Commission and the UK have lauded the move, environmental groups and vulnerable island nations have expressed disappointment, arguing that the measures are insufficient and favor biofuels over more sustainable alternatives. Experts have also raised concerns about the lack of support for developing advanced, cleaner fuels due to cost considerations. ​

Conclusion

The IMO's approval of a global carbon pricing mechanism for the shipping industry represents a pivotal moment in international efforts to combat climate change. However, the compromise nature of the agreement and the absence of key players like the United States underscore the challenges in achieving consensus on environmental policies. As the final adoption of the measures is pending at an IMO meeting in October 2025, stakeholders continue to advocate for more ambitious actions to ensure the shipping sector contributes effectively to global emission reduction goals.​

Source: Outlook Business