IMO Approves Global Carbon Pricing System: Will US Pullout Hurt Climate Goals?

Member states of the International Maritime Organisation (IMO) agreed upon a global pricing system to help curb maritime carbon emissions on April 11, reported AFP.

The decided global pricing system entitles member states to use a less carbon-intensive fuel mix for all ships from 2028, otherwise defaulters will be levied financial penalties.

The carbon pricing measure is expected to be formally adopted at an IMO assembly in October. The AFP report also revealed that 63 member states voted in favour of the carbon pricing system, including the European Union, Brazil, China, India and Japan. Sixteen member states voted against the measures; among them are major petrostates such as Saudi Arabia, Russia and the United Arab Emirates.

Calling the proposals insufficient to meet decarbonisation goals, Pacific Island states abstained from the vote. The United States delegation pulled out of the talks on April 8.

Jesse Fahnestock, Director of decarbonisation at the Global Maritime Forum, told BBC that the deal was a compromise."It is a difficult set of decisions, but it is the first regulation of its kind and that is to be celebrated," he said.

Commenting on the ineffectiveness of the penalties to close the cost gap between fuel types, Fahnestock  added, "You may have incentivised shipowners to prepare a bit for the future fuels but whether the signal is strong enough to get the billions of dollars of investment into the production facilities for these fuels - I don't think these regulations will overcome that. I think more will need to be done."

As per a BBC report, a letter was sent by the US to all countries at the IMO negotiations stating any levy would lead to inflation and if it was passed then “reciprocal measures” would be taken.

Impact of US Pullout on Climate Goals

While the US’ last-minute move was not aligned with its long-held stance at the IMO, it is aligned with President Trump’s withdrawal from climate action which he had explicitly declared on the first day of his assumption of duties by signing an executive order to withdraw the US from the Paris Climate Agreement.

According to the BBC report, the US only flags 178 cargo ships, which represent 0.57% of worldwide commercial shipping tonnage. Considering this data, the US’ decision not to implement the new proposals may not make any significant difference to the funds raised.