������ý

Cargo ships are anchored in the Sea of Marmara as they await to cross the Bosphorus, in Istanbul, Turkey. (Emrah Gurel/AP/File)

[Stay on top of transportation news: .]

The world’s shipping regulator is on the verge of green-lighting a global charge on the industry’s emissions, something that has prompted the Trump administration to threaten tariffs in response.

The International Maritime Organization will this week decide on sweeping new rules to make the sector start paying for the more than 1 billion tons of greenhouse gases it emits each year. While a draft plan had wide support in April, the U.S. has called it a “global carbon tax” on Americans, and has said it would consider measures such as tariffs and port levies.

The IMO plan has been years in the making, and adopting it would be a win for multilateral climate regulations in the face of tariff threats and wider blows to environmental progress ahead of next month’s COP30 climate summit in Brazil. For shipping, it would pave the way for the end of oil as the dominant fuel — benefiting cleaner options like ammonia — while initially potentially raising over $10 billion a year, contributing to costs that could ripple through supply chains.

While final adoption isn’t guaranteed amid opposition from Washington, industry insiders expect it to pass. If there’s no consensus, a two-thirds majority vote in favor would be enough for it to go ahead.

Image

A representative from the International Chamber of Shipping — which covers over 80% of the world’s merchant fleet and therefore a vast chunk of global trade — anticipates the levy passing. So does Edmund Hughes, a onetime official at the IMO involved in environmental regulation. Boston Consulting Group studied April’s vote and which nations stand to benefit from the plan, and also expects the regulations to be adopted.

“This is a defining moment for the industry and a pivotal step forward in global decarbonization efforts,” BCG partner Peter Jameson said. “While some parties may seek to slow or complicate the process through political pressure, that will not be enough to change the outcome.”

U.S. Defiance

The U.S. has sharply criticized the plans from “an unaccountable U.N. organization,” and is sending a delegation to this week’s meeting in London. Last week, Washington again urged other governments to reject the regulations that it said could have “disastrous” economic impacts, saying some estimates are for shipping costs to jump as much as 10% or more.

On Oct. 10, the State Department said it was exploring options including tariffs. The same day, it issued a separate statement saying that visa restrictions, sanctions on officials, and commercial penalties are among responses it’s considering against nations that support the rules — though didn’t mention tariffs.

In response to follow-up questions from Bloomberg this week, it didn’t confirm or deny if tariffs remain on the table as part of options it would consider.

The regulation would raise costs for everyone and risks “becoming a global environmental slush fund at the expense of the shipping industry and its customers,” a representative for the U.S. said Oct. 14 in a speech at the meeting, which is due to continue this week.

Multiple countries, including the U.K. and Netherlands, expressed their support for the framework at the gathering.

Any levies would be another worry for global trade, on top of President Donald Trump’s so-called reciprocal tariffs ranging from 10% to 50% on imports from major trade partners. He has also aimed duties at sectors deemed vital to national security like automobiles, steel and aluminum, and plans to hit others including semiconductors, pharmaceuticals and industrial machinery.

��

The rhetoric between Beijing and Washington has heated up in recent days, with both sides threatening tougher trade barriers if the other side doesn’t reduce some of theirs.

“It would be foolish to underestimate the U.S.’s power,” said Faig Abbasov, director of shipping at nongovernmental organization Transport & Environment.

Adopting the IMO plan would represent a rare bright spot in recent international climate diplomacy and regulation. The Trump administration has been dismantling its domestic climate policy and attempting to disrupt efforts to cut emissions globally. Companies have also ditched climate commitments over the past year as the reality of meeting ambitious time frames becomes clear and the marketing benefits of having green credentials fade.

New Rules

The planned rules would force vessels above 5,000 gross tons to curb their emissions intensity in line with two trajectories: A “base” target and a tougher “direct compliance” target.

If a ship hits the base target but not the stricter one, it will be effectively charged $100 a ton for what it missed. Failing to meet even the base target will incur a steeper penalty of $380 a ton, in addition to the $100-a-ton charge for the difference between the two benchmarks.

The money will go into a fund that will disburse the revenue in multiple ways, including rewards for vessels using low-emission fuels. The regulations would come into effect in 2027, though payments wouldn’t need to start until 2029.

The industry accounts for over four-fifths of the world’s trade and more than 1% of all emissions, and the IMO wants international shipping to reach net zero by around mid-century. The push will need big changes to the fuel-supply chain, with shippers having to use cleaner fuels that are pricier than traditional oil, or paying for missing targets.

The IMO’s framework is the world’s first global, fixed charge on emissions for any industry, according to Sola Zheng, a senior researcher at the International Council on Clean Transportation. While aviation has a similar mechanism, which becomes mandatory from 2027, it involves airlines buying offsets, for which there is no fixed cost.

Enforcement

One question is how the charges will be enforced if any countries pull out of the main treaty governing ships’ air pollution.

Even if a flag state — the nation where a vessel is registered — doesn’t enforce the regulations, a ship flying that flag would still be subject to port state controls when in countries abiding by the rules, said Tore Longva, a decarbonization director at classification society DNV. In theory, such a vessel could only sail domestically unless it voluntarily complied with the regulations.

“It is massive,” said Hughes, the former IMO official who’s a director at Green Marine Associates Ltd. “So much effort has gone into getting to this point — I cannot see wholesale changes of positions.”