All Eyes on the Ocean: A Make-or-Break Climate Moment for Global Shipping

Next week, the International Maritime Organization (IMO) convenes in London for its 83rd session of the Marine Environment Protection Committee (MEPC). On the table: nothing less than the future climate pathway for international shipping. While emissions from global maritime transport have long flown under the radar, the sector currently accounts for nearly 3% of global greenhouse gas emissions – a figure projected to rise if no effective policies are implemented. This session, from April 7 to 15, is widely seen as a “make-or-break” moment. Member states will attempt to reach a consensus on a framework to reduce greenhouse gas emissions from ships. The stakes are high, not only for the climate but also for the direction of future global trade.

 

Two approaches to the same goal

Two main routes are under discussion. The first is a flat carbon levy on each tonne of emissions, which is a simple and transparent mechanism that could immediately price pollution and channel funds into decarbonization. The second is a more complex emissions trading scheme, which would allow cleaner ships to sell credits to more polluting ones.

Momentum is growing behind the levy. Countries representing over 65% of the global shipping fleet now support a flat-rate tax. Crucially, this includes major flag states like Panama and Liberia, whose endorsement signals a shift in the political winds. Their participation is vital, as they oversee a large share of the world’s merchant fleet and help enforce IMO regulations. However, the exact price of such a levy remains highly contested, with proposals ranging from $18 to $150 per tonne. While lower rates may win broader support, they may also fall short of driving a real energy transition. Research suggests a meaningful shift toward zero-emission fuels would require a much higher price signal, ideally combined with financial incentives for clean technology adoption.

 

The particular role of LNG

Meanwhile, emissions trading schemes, while theoretically appealing, raise serious concerns. Critics warn that such systems may unintentionally reward the use of fossil LNG, which – despite having lower CO₂ emissions than traditional marine fuels – still produces substantial greenhouse gases, including methane. Under current trading scheme proposals, LNG-powered ships could benefit from disproportionately lower costs, discouraging investment in genuinely clean alternatives like green methanol or ammonia. This risk of “perverse incentives” highlights why some industry leaders and researchers continue to favor a straightforward carbon levy, coupled with subsidies for zero-emission fuels. Complexity, in this case, could undermine climate ambition.

 

Belgium’s stance

The Royal Belgian Shipowners’ Association (KBRV) has launched a campaign emphasizing the need for a level playing field. European companies are already subject to strict regulations such as FuelEU Maritime and the EU Emissions Trading System. Without global alignment, they risk being disadvantaged compared to operators from countries with fewer requirements. The KBRV supports a carbon levy as the fastest and fairest way to achieve sector-wide decarbonization. Still, a hybrid solution (i.e., combining both economic and technical measures) may be the most politically feasible outcome at this stage.

 

Consensus or collapse?

At the IMO, decisions require full consensus among all member states. That makes negotiations slow and difficult, but when consensus is reached, implementation is swift and global. This April meeting is widely considered the final opportunity to secure a political agreement. A follow-up session in September is expected to work out the technical and legal details.

 

The potential impact on European legislation

An open question remains: what happens to European measures like FuelEU if a global system is agreed? If the IMO framework matches Europe’s ambition, there’s room for streamlining. But if not, we risk a fragmented system that could slow down the global shift to cleaner shipping.

 

At Ortelius, we believe strong international coordination is essential for decarbonizing hard-to-abate sectors like shipping. While a global carbon levy remains the most efficient solution, real-world diplomacy often calls for compromise. We continue to track these developments closely, helping clients navigate uncertainty and stay aligned with fast-evolving climate standards. Want to know how these negotiations may impact your operations or investments? Let’s talk.

 

Sources:

• https://www.ft.com/content/4c9a39c0-c01e-478c-b208-5277960f0768
• https://www.ft.com/content/db5b6f52-8f10-40e1-b61b-28a32c439d7b
• https://www.flows.be/scheepvaart/2025/04/erop-of-eronder-voor-klimaatconferentie-scheepvaart/