Green Tide Rising - Will Shipping Lead the Global Race to Net Zero?
Fissures at Sea: A Global Divide Emerges
‘Rich and poor nations clash,’ declared The Guardian on April 8th, capturing the intensity of debates within the London headquartered International Maritime Organization (IMO) regarding a proposed emissions levy on global shipping. This marked a rare moment of contention for the London-based maritime regulator, which typically relies on consensus.
After a decade of deliberations on the decarbonization of the maritime industry, at its 83rd session, the Marine Environment Protection Committee (MEPC-83) confronted the formidable challenge of adopting a Market-Based Measure (MBM) that balanced environmental effectiveness with economic fairness. Five distinct proposals were tabled: (a) The International Chamber of Shipping advocated for a fixed levy per ton of CO₂ emitted. (b) China proposed a market-driven approach where ships could trade compliance units and invest in alternative fuels. (c) The European Union suggested a fixed GHG levy, managed by an IMO-administered fund. (d) India introduced a ‘Bridging Mechanism’, targeting only under-compliant ships to bear financial burden, those above compliance level to generate tradable surplus units, while rewarding those using Zero or Near-Zero (ZNZ) fuels. (e) Singapore proposed an enhanced version of India’s model, involving a Greenhouse Gas Fuel Standard (GFS) and a tiered system rewarding surplus emission units and requiring the purchase of remedial units for underperformance.
Politics Before Policy: U.S. Withdrawal Sparks Tension
Even before the debate on MBMs could fully unfold in the International Maritime Organisation, geopolitical tensions took centre stage. Trump administration, which had already withdrawn from Paris Agreement and had stripped the agency that responds to disaster from their climate work related responsibilities, chose not to participate in the IMO deliberations and warned of "reciprocal measures" if the EU-backed uniform carbon levy were passed. Nonetheless, discussions proceeded.
Ultimately, IMO members voted 63 to 16 in favor of Singapore’s hybrid model based on India’s proposal, making international shipping the first global industry to adopt a mandatory emissions levy framework. Having piloted a compromise formula amidst extremely divergent views, India and Singapore have both claimed credit for the successful outcome.
Cautious Optimism: What Lies Ahead
The decision of MEPC 83 is not final yet and IMO still seem to be walking a tight rope. Despite the vote, the path to implementation is far from straightforward. MEPC-83’s decision is currently provisional, having approved the Net Zero Framework as a proposed amendment to Annex VI of the MARPOL Convention, which governs air pollution from ships. The amendment will now undergo a six-month circulation period among all contracting parties to MARPOL. For final adoption, it requires a two-thirds majority of votes from members present and voting. If all 101 parties participate, at least 67 must support the measure.
Even if adopted, the amendment could still be blocked, should one-third of the parties—provided they account for at least 50 percent of the global shipping tonnage—formally object in writing, and the measure could be nullified. With 63 votes in favor, 16 against, and 22 abstentions or absences, the outcome remains uncertain. The process ahead is critical and could reshape the dynamics of global shipping regulation for decades to come.
Uneasy Alliances: National Interests Rule the Debate
The wide range of positions expressed during MEPC-83 underscores the enduring dominance of national interests in global climate diplomacy. Oil-exporting countries, led by Saudi Arabia, opposed any significant transition to green fuels, prioritizing the protection of their fossil fuel markets. In contrast, small island nations and least developed countries advocated for steep carbon levies, seeking to redirect revenues into broader green development initiatives.
China, along with other large shipping nations, pushed for minimal levies to preserve competitiveness while focusing on investments in cleaner fuels. Norway and other Scandinavian countries sought recognition for their early and costly efforts in decarbonizing shipping, proposing that these efforts be rewarded through surplus credit systems. Brazil has been advocating for a rapid shift to methanol as a primary marine fuel, while several nations, citing a lack of viable green technologies, hoped for delayed implementation.
Post voting also scepticism lingered among shipowners in traditional maritime powerhouses like Greece, who questioned the necessity and feasibility of a green levy altogether. The range of these responses illustrates the immense challenge the IMO faces in crafting a universally acceptable emissions framework.
Why Green Shipping Matters: A Giant in Emissions
Shipping may seem invisible to most consumers, but it plays an outsized role in global emissions. The sector emits approximately one billion metric tons of greenhouse gases each year, representing about 2.8 percent of total global emissions. If ranked as a country, international shipping would be the sixth-largest emitter in the world—between Germany and Japan.
Projections indicate that, without corrective action, emissions from shipping could rise by as much as 50 to 250 percent by 2050, driven by expanding global trade. Although aviation emits slightly less CO₂ (2.4%), its emissions have a greater warming effect due to high-altitude release. Despite both sectors contributing less than road transport, they face heavier regulatory pressure because of their international nature.
Rising ambition and limited resources
To align with UN Sustainable Development Goal 13 and the Paris Agreement, the IMO began implementing emissions-reduction measures in 2011, followed by the Initial GHG Strategy in 2018 and the updated IMO GHG Strategy in 2023. So far it has included in MARPOL Annex VI a technical measure (Energy Efficiency Design Index or EEDI), an operational measure (Ship Energy Efficiency Management Plan or SEEMP)for reduction of GHG emission from ships and introduced mandatory recording and reporting of fuel oil consumption.
Consistent with the ‘Paris agreement temperature goals’ it has also adopted ‘levels of ambition’ and ‘guiding principles’. Between 2018 and 2023, it has agreed to fix a target for reducing carbon intensity (CO2 emissions per transport work) by at least 40% by 2030 compared to 2008 levels and by 70% by 2040 (while striving for 80%) and ultimately achieving net-zero by 2050. This is notably more concrete than the International Civil Aviation Organization (ICAO), which has only pledged a “long-term aspirational goal” of net-zero emissions by 2050 without setting interim targets.
The erosion of equity – Guiding principle at risk
What is interesting, however, is the gradual erosion of equity and the guiding principle of ‘common but differentiated responsibilities and respective capabilities’ (CBDR-RC) incorporated in the 2018 initial GHG strategy. CBDR-RC is core principle enshrined in the climate agreements like UNFCCC, its Kyoto Protocol and the Paris Agreement. CBDR-RC acknowledges that all nations must address climate change but recognizes historical responsibility and unequal capacities. Developed nations, with their longer industrial histories, are expected to bear greater burdens. However, recent IMO proceedings reflect an effort by wealthier nations to shift responsibility onto developing economies, despite stark differences in income and consumption.
India’s Green Advantage: A Strategic Opportunity
While a carbon levy and GHG targets set by IMO may pose short-term challenges for certain sectors of the Indian economy, India is likely to emerge as a long-term beneficiary of the new MBM framework. According to the United Nations Conference on Trade and Development (UNCTAD), the impact of the MBM on India’s maritime logistics costs will be modest in the near term—ranging from 4.98 to 7.29 percent on imports and 5.92 to 8.09 percent on exports by 2030. By 2050, these figures are projected to rise to about 33 to 35 percent. However, the actual impact on trade volumes is expected to be minimal.
Currently, India operates 236 ships over 5,000 gross tonnage, with only 135 involved in international voyages. Since MBMs apply only to international shipping, India’s coastal fleet remains unaffected. At present, India spends roughly $400 million per year on fuel for its international fleet. The MBM is projected to increase this by approximately $108 million by 2030—a manageable rise given the scale of India’s maritime economy.
Hydrogen Horizon: India’s Clean Fuel Opportunity
Perhaps the most exciting implication of the MBM framework is the potential for India to become a global hub for clean energy exports. As the world’s third-largest importer of fossil fuels, India is now investing heavily in green hydrogen through its National Hydrogen Mission. Industrial giants such as Reliance, Adani, and JSW are also planning to scale up production, while three Indian ports are preparing to offer green hydrogen bunkering services.
Under the mission’s guidelines, Indian green hydrogen must meet a well-to-wake greenhouse gas fuel intensity of no more than 2 kg CO₂e per kilogram of hydrogen, translating to about 16.7 grams of CO₂ equivalent per megajoule. This standard positions Indian hydrogen well within the IMO’s reward thresholds, which are capped at 19.0 g CO₂e/MJ until 2034 and 14.0 g CO₂e/MJ thereafter. This alignment creates a significant opportunity for India to export green fuels to the global shipping industry and capitalize on international incentives.
Final Word: A Sector at a Crossroads
Global shipping now stands at a transformative moment. Despite persistent disagreements and uncertain implementation pathways, the adoption of a market-based measure by the IMO represents a milestone in the journey toward decarbonization. If successful, this framework could make shipping the first truly global sector to operate under binding climate goals—setting a powerful precedent for others to follow.