How carbon pricing can chart a path to net zero shipping

At the International Maritime Organization’s (IMO) 83rd Meeting of the Marine Environment Protection Committee, member states have been grappling with decisions that will lay the path for international shipping’s decarbonization voyage.

Several measures are in discussion to help reach net-zero emissions by 2050, reduce the sector’s pollution and raise revenues to mitigate climate-related consequences for shipping communities worldwide. These include a legally binding economic mechanism on carbon, a global fuel standard and a framework for disbursing revenues.

Carbon pricing is a proven, practical and scalable tool. It could incentivize ship owners and operators to adopt more energy-efficient practices and reduce their reliance on fossil fuels.

It could also catalyze innovation, allowing fuel providers to see more value in producing cleaner fuels for the market in the near term.

Making zero and near-zero-emission fuels and technologies more cost-competitive makes carbon pricing in shipping a powerful financial driver for reducing greenhouse gas emissions globally.

It would also generate revenue to reinvest in the clean technologies, green port infrastructure, and sustainable fuel production needed to achieve net-zero emissions and build resilience in climate-vulnerable communities.

Disbursing revenues towards efficiency and equity goals – such as capacity building, climate mitigation and adaptation in climate-vulnerable regions – strengthens the global shipping sector and ensures the availability of essential services and infrastructure worldwide.

Communities that provide key services to the global shipping industry are also some of the most climate-vulnerable communities.

Ensuring revenues from carbon pricing go towards strategic supply chain investment is essential not only to prevent communities from suffering disproportionate climate impacts to their livelihoods but also to create a resilient, thriving maritime industry.

A steady revenue stream would also create a predictable business environment in which to plan long-term decarbonization strategies. For example, revenues allocated to green port infrastructure and sustainable supply chains can directly support the industry’s profitability by enhancing operational efficiency and reducing future costs associated with climate risks.

Adopting a zero-emission strategy for supply chains and energy systems – on and off port terminals – benefits the climate, surrounding communities’ health and operators’ bottom lines.

A key criterion in meeting the IMO’s 2050 net zero goals will depend on how revenue is managed and whether disbursement can happen quickly and scale.

Our research shows that to deliver a just and equitable transition, the IMO should align with climate financing with the experience, infrastructure and governance frameworks that can reach resources to regions and communities that need them most.

Funds such as the Green Climate Fund and the Adaptation Fund aim to strengthen and support developing nations in building capacity for climate action and adapting to climate change. Such targeted projects, aligned with equitable objectives, can help countries that bear the brunt of climate change impacts.

While the IMO establishes its in-house net zero fund, a hybrid approach is possible. This would allow the UN body and its member states to retain strategic oversight of revenue allocation while entrusting a portion of the funds through existing channels that can leverage their proven governance structures and operational expertise.

This collaborative framework could streamline implementation, avoid duplication and enable the IMO to deliver its decarbonization, economic and equity commitments at speed and scale while staying focused on practical and timely efforts.

Through a strong economic mechanism on carbon and a well-designed revenue disbursement framework, the IMO can create long-term financial stability while boosting global shipping’s reputation as leading in the energy transition.

It would raise the sector’s credibility with investors, customers and stakeholders who prioritize sustainability while fostering trust and collaboration across the value chain.

The IMO’s collaboration with existing climate finance structures would exemplify the multilateral effort required to tackle climate challenges the sector and member states face holistically.

This synergy aligns with the United Nations’ Sustainable Development Goals (SDGs), particularly SDG16 – promote peaceful and inclusive societies for sustainable development – and SDG17 – strengthen the means of implementation and revitalize the Global Partnership for Sustainable Development.

Together, they promote accountability, partnership and broad international investment in climate resilience projects in developing nations.

A legally binding carbon pricing measure for shipping and a strong global fuel standard, combined with effective use of the revenues, could accelerate a fair and efficient energy transition in the sector. It would also unlock major investments in clean technologies, climate resilience and broader socioeconomic benefits across the maritime industry.

Member states at the IMO are encouraged to seize this generational opportunity to make courageous decisions that support a thriving future for shipping, its connected communities and value chains worldwide.