Targeted IMO Revenue Distribution Could Support Vulnerable Countries: Study

The study finds that IMO's Net Zero Framework could generate $11-12 billion/year by 2030. File Image / Pixabay

Revenues from the IMO’s forthcoming emissions pricing scheme must be carefully distributed to ensure vulnerable nations benefit from shipping’s energy transition, a new study warns.

The IMO’s Net Zero Framework, scheduled for adoption in October, is expected to raise $11-12 billion/year by 2030, according to the UCL Energy Institute Shipping and Oceans Research Group press release on Tuesday. 

The study published in the One Earth journal states that without equity-focused distribution, least developed countries (LDCs) and small island developing states (SIDS) risk being disproportionately hit by higher shipping costs while struggling to access investment in clean shipping technologies.

While the overall trade impacts of emissions pricing are likely to be modest, low-income nations face particular challenges.

Many already endure higher transport costs relative to the value of their exports, worsened by geographic remoteness and less efficient ports.

The UCL analysis highlights that wealthier nations, including Singapore, Norway and the US, are leading low-carbon shipping investments, while countries with significant potential -such as Mauritania, Namibia and Mozambique - remain constrained by governance, financing and infrastructure barriers.

"We found that many countries vulnerable to climate change and transport costs are also not yet participating in the transition to low-carbon shipping," Dr Marie Fricaudet, lead author and senior research fellow at UCL.

"This means that any revenue distributed without a focus on equity (e.g. to subsidise fuels and infrastructure without specifically targeting vulnerable countries)."

The researchers recommend using part of the revenues to offset trade costs for LDCs and SIDS, alongside targeted funding for adaptation and development, ensuring that the shipping sector’s decarbonisation is inclusive and globally fair.