IMO climate talks must advance on the details on shipping’s pricing mechanism and how to disburse its revenues fairly  

• Countries are poised to engage in critical discussions on which global measures to adopt to phase out shipping’s greenhouse gas (GHG) emissions at the upcoming International Maritime Organization meetings.

• With growing support for a GHG levy on shipping’s emissions, it’s important to get clarity on how the revenues generated by a pricing mechanism would be disbursed in a way that supports the world’s most climate vulnerable countries and enables a just and equitable transition.

(London, 23 September, 2024) This week’s discussions at the International Maritime Organization (IMO) are set to be one of the final chances for Member States to come together and decide on the design of the measures that will help the shipping sector to decarbonise, before they are formally approved next spring and adopted later that year.

Discussions start today at the 17th intersessional working group on greenhouse gas emissions (ISWG-GHG 17), directly followed by the 82nd Marine Environment Protection Committee (MEPC 82). These meetings mark a critical moment for movement towards the adoption of a basket of ambitious and equitable mid-term GHG reduction measures that align with the 1.5°C pathway. The measures must be finalised and approved by MEPC 83 in spring 2025 for adoption in autumn 2025.

MEPC 82 comes swiftly after the conclusion of the comprehensive impact assessment (CIA) of the candidate mid-term GHG reduction measures, which will inform the discussions at these IMO negotiations. However, many States' participation during the assessment process, particularly some of the most climate vulnerable countries, was limited due to capacity and logistics reasons.

Ana Laranjeira, Senior Manager at Opportunity Green says:

“Currently, ISWG-GHG 17 and MEPC 82 are the only meetings scheduled before the Spring meetings, and critical decisions related to the measures are still yet to be made. Delegations have put forward detailed proposals, including text-based amendments to MARPOL (the main international convention covering prevention of pollution of ships), with regards to both economic and technical elements of the basket of mid-term GHG reduction measures. While these proposals demonstrate growing support for a GHG levy on all lifecycle emissions from ships, many unanswered questions remain, including on how a pricing mechanism will work, how the revenues will be managed, and how they should be disbursed.

“While revenue generation is a by-product of the proposed economic measures to reduce shipping’s emissions, they will inevitably generate significant funds. The way these revenues are distributed will have a direct impact on the nature of shipping's decarbonisation and on whether the IMO fulfils its commitment to secure a just and equitable transition.”

Shipping is a lifeline for many of these countries, particularly for remote Small Island Developing States (SIDS). It provides them with essential goods, jobs, and facilitates their international trade. But the sector is also a major emitter, further exacerbating the dire situation of climate vulnerable countries.

Analysis of the global economic impacts of climate change estimates that by 2030, SIDS in the Pacific will suffer an average annual GDP loss of between 0.75% – 6.5%, compared to a global average of 0.5%. Already, SIDS have seen their external debt more than double between 2008 – 2021. A vicious cycle is being generated with these countries having to divert an escalating percentage of their limited resources to respond to extreme weather events and paying back debt.

Blánaid Sheeran, Project Officer at Opportunity Green concludes:

“To date, there has been very little formal debate on revenue disbursement during the IMO meetings. This is something that needs to change as the way that funds are distributed will have a direct impact on the nature of shipping's decarbonisation and on whether the IMO fulfils its commitment to secure a just and equitable transition. For too long, frontline countries and communities have been fighting the most negative impacts of climate change with a lack of funding to help them do so. According to the Polluter Pays Principle, the emitter should bear the cost of their pollution. For this reason, we must ensure any revenues generated from a shipping levy are distributed fairly, so that no one is left behind.”

ENDS

Notes to editors

Opportunity Green is an NGO working to unlock the opportunities from tackling climate change using law, economics, and policy. We do this by amplifying diverse voices, forging ambitious collaborations and using legal innovation to motivate decision makers and achieve climate justice, with particular emphasis on the aviation and shipping industries.

Since October 2022, Opportunity Green has been working bilaterally with a number of ambitious climate vulnerable IMO Member States – working collaboratively with their London Embassies and/or capitals, towards building their capacity to actively participate in these meetings, including ISWG-GHG 16. Our work with these countries includes inter alia, developing unbiased information briefings ahead of the IMO meetings, providing ad-hoc legal and policy advice, and facilitating networking opportunities.