World’s first global shipping carbon price talks back at UN’s bargaining table

As negotiations on a landmark climate agreement introducing the world’s first global carbon price on any polluter are set to catch a second breeze, the resumption of talks at the UN is seen as a big test whether countries can unite against the U.S. and other largely oil-producing states to defend the framework and adopt it as it is later this year to help curb shipping’s reliance on fossil fuels and cut vessel fuel costs in the long-term.

After the International Maritime Organization (IMO) member states agreed in 2023 that meeting the shipping sector’s climate commitments would require a carbon price as an economic measure as well as a fuel standard as a technical measure, the combination was then included in the agreed IMO Net-Zero Framework (NZF) for international shipping in 2025. However, the NZF’s adoption was delayed a few months later, following a close vote, due to strong opposition from the U.S., Saudi Arabia, Russia, and other petro states.

Rockford Weitz, Professor of Practice & Director of the Maritime and Arctic Studies Program, The Fletcher School at Tufts University, underlined: “By rejecting the IMO Net-Zero Framework, the Trump administration is letting ideology undermine their own goals, as outlined in the 2025 National Maritime Strategy and 2026 Maritime Action Plan, both of which aim to support a revival of U.S. shipbuilding and increase global competitiveness.

“One of the best ways to achieve this is by supporting investment in new, clean technologies, including ships powered by ammonia and methanol powered engines. Instead, the administration is trying to block the very framework that would encourage that investment.“

As the IMO has until November 2026 to discuss adoption again, governments are going back to the negotiating table at the UN to contemplate the Net-Zero Framework, with the talks slated to take place at the International Maritime Organization (IMO) in London as a two-part summit: technical working group talks (ISWG-GHG-21) on 20 – 24 April, and the 84th session of the Marine Environment Protection Committee (MEPC84) on 27 April – 1 May. 

Jesse Fahnestock, Director of Decarbonisation at the Global Maritime Forum, emphasized: “The IMO’s greenhouse gas strategy remains in place—there is no alternative pathway on the table for shipping’s transition to net-zero. Global regulation will give the industry the certainty it needs to make critical investments in the new fuels, vessels, and infrastructure needed to deliver on that strategy.

“Wherever the politics go, shipping needs a framework that is stable, enforces compliance in a way that companies can price, and puts resources behind the transition in a globally inclusive manner. Doing less or delaying difficult choices will only hurt the industry’s ability to prepare for the future.“

The latest summit is happening against the backdrop of disruptions in oil flows and shipping bunker fuels costs doubling due to the conflict in the Middle East, exposing how dependent global shipping is on volatile fossil fuels. The technical discussions in the first week of the summit (ISWG-GHG-21) are planned to focus on ironing out key policy details in the NZF’s guidelines that are still to be decided.

Fanny Devaux, Shipping Director at Transport & Environment, said: “The current oil crisis should be at the centre of discussions at the IMO. The disruption of the Strait of Hormuz has already cost the industry 11.2 billion EUR , making it clear that shipping’s dependency on fossil fuels is a massive economic liability.

“Alternative propulsion such as electricity or e-fuels offer the only viable escape against the geopolitical premium of fossil fuels. The shipping industry deserves an IMO with the backbone to prioritise a real deal for net-zero over political pressure. We can’t settle for anything that just rubber stamps the status quo without any climate ambition.“

This encompasses clean energy and how to spend the estimated $10-12 billion a year worth of revenues generated through the framework’s carbon pricing, such as penalty fees for emissions above a certain limit. A major focus during the week will be on the role of biofuels in shipping’s clean transition, with some countries pushing for an expansion into cheap food- and crop-based biofuels, which experts and campaigners warn come with serious environmental and climate hazards. 

Em Fenton, Senior Director of Climate Diplomacy, Opportunity Green, outlined: “The IMO Net-Zero Framework is not just a climate measure – it’s a test of whether international cooperation can survive in an era of increasing geopolitical pressure. A majority of the world’s nations want this to succeed. Opposition may be loud, but that doesn’t mean it will drown out the voices for ambition and justice, many of whom come from communities most greatly affected by climate impacts.

“We must remember that what happens at these IMO meetings matters far beyond the shipping industry. It will determine whether billions of dollars in revenue reaches the countries, communities and zero emission technology projects that need it most, accelerating an equitable transition for all.”

On the other hand, the political discussions in the second week (MEPC84) will contemplate the future of the NZF and whether it remains in its current form or is reopened for substantial changes in its architecture, regarding removing the carbon price and/or weakening the agreed limits to phase out fossil fuels. 

John Cooper, CEO of BAR Technologies, pointed out: “The current geopolitical backdrop is a clear reminder that shipping remains fundamentally exposed to fossil fuel price shocks and that exposure is only becoming more volatile. Fuel typically accounts for 50–60% of voyage costs, so swings in energy markets feed directly into the cost of global trade.

“Wind propulsion solutions such as WindWings can immediately cut fuel consumption and reduce exposure to volatile fuel markets, without waiting for new fuels or infrastructure. A clear global policy signal, such as the IMO’s Net-Zero Framework, is now critical to accelerate the uptake of clean energy on ships. Without it, the industry risks a more chaotic and costly transition.”

As the EU, the UK, Brazil, China, Norway, Mexico, Kenya, DRC, Ghana, Togo, and Pacific Island states broadly back the NZF as it is, including its revenue-raising ability through the carbon price, they see it as critical to making the framework work and an opportunity to make the shipping sector fairer. In contrast, Japan is suggesting to scrap the carbon price as a compromise, which is likely to antagonise vulnerable countries that would lose access to critical finance.

Michael Mbaru, Maritime Decarbonisation and Green Shipping Expert at the Office of the Kenya Climate Special Envoy, commented: “The framework approved in 2025 was carefully designed as a package combining fuel standards and a pricing mechanism. The pricing element is not optional – if it goes away, the whole framework goes away. We remain committed to a single global rulebook and are not willing to reopen the framework.”

While a group of largely oil-producing countries, including Saudi Arabia, the UAE, Russia, and Argentina, want the carbon pricing element out as they also push to weaken agreed limits on carbon intensity in fuels, which would prolong the use of fossil fuels, the U.S., led by the Trump administration, rejects the NZF altogether. 

Aurelia Leeuw, Director of EU Policy, SASHA Coalition, underscored: “For the bold companies leading the maritime transition, the economic measure alongside the fuel standard in the NZF is non-negotiable. Creating the fiscal enabling environment for the frontrunners developing the most sustainable marine energy systems demands long-term, stable market signals and predictable sources of revenue from portions of the net-zero fund.

“Without the regulatory certainty provided by the economic measure, the NZF may risk locking in fossil fuels and dramatically undermining the industry’s long-term resilience and sustainability.”

A recent analysis by UCL warns that removing the revenue-raising ability of the NZF ensured by a carbon price would have serious negative impacts on the sector’s energy transition, increasing the vulnerability of developing countries to economic shocks due to increased fuel price volatility, slower adoption of clean energy, and lack of revenues for a just and equitable transition. A study funded by CMA-CGM also found that decarbonising shipping under the NZF would ultimately be cheaper than the cost of inaction.

Delaine McCullough, President of Clean Shipping Coalition, underlined: “The Net-Zero Framework is imperfect, but includes all of the critical technical and economic elements to allow IMO and the shipping industry to meet the climate commitments they set themselves in the 2023 IMO GHG Strategy, as well as their commitment to ensuring that all countries have the opportunity to fully participate in the shipping energy transition – or at least are not harmed by it.

“It is the outcome of years of negotiations and compromise and has broad support among IMO member states. Anything less would be a climate failure and a political dead end.”

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