A global shipping emissions tax is being seriously considered as nations seek to curb maritime pollution. This would force the shipping industry to rethink fuels, fleets, and carbon compliance.

A simple climate levy paired with a green fuel standard would help narrow the price gap between fossil and green fuels, such as hydrogen, methanol, and ammonia.

Nations are trying to reach an agreement to charge commercial vessels a fee for their emissions, effectively creating the world’s first global carbon tax.

The International Maritime Organization, which regulates international shipping, has set a target for the sector to reach net-zero greenhouse gas emissions by around 2050 and is committed to ensuring that fuels with zero or near-zero emissions are used more widely. The Marine Environment Protection Committee meets Monday through Friday in London.

The committee, comprised of IMO member states, is working to approve proposed new global regulations to price maritime greenhouse gas emissions and set a marine fuel standard to phase in cleaner fuels.

IMO Secretary-General Arsenio Dominguez, who thinks the industry must do more to cut carbon pollution, said the measures are more than climate aspirations—they will become mandatory for ships operating globally. In a statement Thursday, he told The Associated Press that the committee will “set the course for a net-zero future for the maritime sector. “

Emma Fenton, senior director of climate diplomacy at the U.K.-based climate change nonprofit Opportunity Green, said the future of clean shipping hangs in the balance. Fenton said a high-price, simple flat-rate levy on shipping’s greenhouse gas emissions is the only way to decarbonize the industry equitably.

“If an agreement is reached, it would represent a huge moment of solidarity in the fight to tackle climate change,” Fenton said. “For the first time, we will hopefully have an effective global framework tackling this international issue. Most emissions are tackled domestically.”

Here’s what to know:

What are the talks about?

Emissions from shipping have increased over the last decade to about 3% of the global total, according to the United Nations. As vessels have become much larger, they deliver more cargo per trip and use immense fuel oil.

Maritime nations agreed in 2023 to reduce emissions from the shipping industry, although several experts and nations were critical of the deal because it did not set 2050 as a hard deadline. The IMO is now in the process of adopting regulations to achieve the goals agreed to in 2023.

Why are they essential to the world?

A simple climate levy, paired with a green fuel standard, would help narrow the price gap between fossil fuels and green fuels, such as hydrogen, methanol, and ammonia, according to the Global Maritime Forum, a nonprofit organization that works closely with the industry. Shipping relies heavily on fossil fuels and the sector won’t transition off those on its own, said Jesse Fahnestock, who leads the forum’s decarbonization work. And it will take time to build up a supply of e-fuels based on renewable electricity, so investments need to happen now.

Most ships today run on heavy fuel oil, which releases carbon dioxide and other pollutants when burned. Dominguez has said that major decarbonization requires an overhaul of shipping fuel.

The Clean Shipping Coalition is calling on governments to commit to a high price on all ship emissions and a strong fuel standard. The alliance of environmental non-profits is also urging countries to revise the IMO’s tool for measuring a ship’s carbon intensity, to quantify and increase their efficiency transparently, and reduce the amount of fuel burned in the long term.

What is the status of the negotiations?

Led by Pacific island nations, whose very existence is threatened by climate change, more than 60 countries support a flat levy per metric ton of emissions to reach net zero fairly. The shipping industry also supports a fee. The International Chamber of Shipping represents over 80% of the world’s merchant fleet. Its secretary general, Guy Platten, said a pricing mechanism for maritime emissions is a pragmatic solution and the most effective way to incentivize a rapid energy transition in shipping.

Some countries, notably China, Brazil, Saudi Arabia, and South Africa, prefer a credit trading model over a fixed levy. In this model, ships receive credits for staying under their emissions target and purchase credits if they exceed it. Other countries want a compromise between the two models.

Some fear that anything short of a universal levy would jeopardize climate goals, allowing wealthier ship owners to buy compliance while continuing to pollute. Ambassador Albon Ishoda, Marshall Islands’ special envoy for maritime decarbonization, said IMO’s climate targets are “meaningless” without the levy. Revenue from a levy could help developing countries transition to greener shipping, so they aren’t left behind with dirty fuels and old ships.

What’s expected by the end of the meeting?

If the committee agrees and finalizes the regulations’ text, they could be formally adopted in October and take effect in 2027. According to the IMO, that could send a powerful signal that the green transition is happening and that it’s possible for a global industry.

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