According to the International Maritime Agency, the contract is the first global CO2 price in any sector.
According to the United Nations, shipping companies will have to pay for large amounts of greenhouse gases.
The Net Zero Framework’s regulatory draft is expected to be officially adopted in October this year, before it comes into effect in 2027.
IMO, a specialized agency that regulates maritime transport, said the rule was the world’s first rule to combine mandatory emissions restrictions and greenhouse gas (GHG) pricing across the industrial sector.
Rules are required for large marine vessels with gross tonnages of over 5,000.
Starting in 2028, vessels will be charged a $380 penalty per metric ton for every extra tonne of CO2 worth above the fixed emissions threshold, and a $100 penalty per 100 for emissions above the stricter emissions limit.
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“Low emissions” ships, which operate under benchmarks, are subject to reduced incentives or compliance costs, creating economic motivation for decarbonisation.
IMO Executive Director Arsenio Dominguez said in a statement that the regulations “represent another important step in the collective efforts to combat climate change, another important step in modernizing shipping, and demonstrate that IMO will realize its commitment.”
The International Shipping Office (ICS) said it welcomed the measure.
On Friday, the Industry Association, which accounts for around 80% of the world’s merchant tonnage, said it has advocated a globally agreed carbon price since 2021.
“Shipping is currently at the forefront of efforts to rapidly decarbonise the climate crisis,” said Guy Platten, executive director of the International Maritime Office.
According to the UK government, cheap, energy-dense heavy fuel oil is used by 75% of all marine vessel types worldwide.
However, biofuels in the form of methane, methanol or fuel oils can have their own issues as they are touted as a convenient way for delivery companies to reduce carbon emissions.
According to a European non-governmental organization dedicated to promoting “sustainable transport,” Transport & Environment (T&E) said the new rules could generate around $10 billion a year until 2035.
The rules also say that promoting first-generation biofuels is likely to lead to rainforest destruction, potentially making nearly a third of global delivery to be carried out in 2030 with biofuels.
“There is a lack of strict sustainability rules that damage biofuels like palm and soybean oil, making it the cheapest fuel to comply with IMO rules, so it could be a go-to option,” T&E says.
One study found that the “biofuel-dependent” shipping industry requires a huge amount of farmland.
Approximately 35 million hectares (total German area) in 2030 should be needed to produce enough crops to meet the increased demand for biofuels from the shipping industry.
“Many in the shipping industry say they use waste biofuels instead, such as spent cooking oils, animal fats and agricultural residues. However, waste biofuels can only cover a small percentage of the ship’s forecast biofuel demand due to limited availability,” T&E said.
According to the Shipping News Journal Lloyd list, 63 countries have approved the agreement, including China, Brazil, South Africa and many European states.
However, the US was not part of the talks.
Before the meeting, a US State Department spokesman said Washington would not “engage in negotiations” at the IMO, noting that it was the administration’s policy to put our interest in “developing and negotiating international agreements.”
Last year, US President Donald Trump announced that the United States had withdrawn from the Paris Climate Agreement.
Trump has identified oil, natural gas, coal, hydroelectric power, geothermal, biofuels, critical minerals, and nuclear energy resources as domestic energy sectors that may face unfair obstacles to domestic growth and development.
Melanie Sun contributed to this report.
