Criticized for a time for not being aggressive enough in terms of setting emission targets for the ocean shipping sector, the International Maritime Organization (IMO) may be the first regulator to enforce mandatory charge on greenhouse gas emissions.

Supply Chain Digest Says...   Amidst all this, the World Bank asked an interesting question: if this rule moves to deployment, what should happen to the money the new fees generate?     What do you say?   Click here to send us your comments       Click here to see reader feedback

The IMO, which regulates global shipping, last week held talks in London on the subject, saying it planned to finalize its rules and fees sometime in 2026 for execution in 2027.

But there are many questions.

A report from Bloomberg on the subject said those include “how it will actually work and whether there will be a significant impact on the emissions of an industry that carries 80% of world trade and spews more than a billion tons of carbon dioxide into the atmosphere each year.”

But the IMO is confident it will find a way.

“We will have a pricing mechanism,” said the IMO’s secretary general, Arsenio Dominguez, in a meeting with journalists at the organization’s London headquarters. “Of that, I have no doubt.”

One group of countries has submitted a plan for a minimum emissions charge of $150 per ton of CO2-equivalent. That would increase the cost to carriers by hundreds of dollars for every ton of bunker fuel they burn.

European Union nations, Canada and China are also reported to have submit proposals for GHG pricing in the shipping sector.

It turns out the IMO has unsuccessfully been down this path before, with a failed in 2022, for a modest $2 per ton that failed to gain enough support from member countries.

The new initiative discussed in the London IMO meeting is actually a very big deal, not only in terms of a large increase in costs that carriers and ultimately shippers will have to bear.

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Bloomberg says that if it is OKed and deployed, the IMO’s program would the planet’s first global, mandatory price for CO2 emissions.

And no other such discussions for any other sector are as advanced, Dominik Englert, a senior economist at the World Bank, told Bloomberg.

Amidst all this, the World Bank asked an interesting question: if this rule moves to deployment, what should happen to the money the new fees generate?

SCDigest cynically wonders if nice raises for IMO staff are part of the mix.

The World Bank offers some other ideas, including:

• Speeding decarbonization in the shipping industry

• Reinvesting carbon revenues into port infrastructure can help lower the costs of final delivered products

• Helping nations and industries mitigate and adapt to climate change

In the end, “The UN is on the edge of adopting the world’s first-ever global emissions price, but the policy will only be as successful as countries make it,” said Sandra Chiri, of not-for-profit organization Ocean Conservancy, told Bloomberg.

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