Nations Controlling 70% of Global Shipping Tonnage Back Fuel Standard and Levy: Report

This strong backing suggests that mid-term measures like the GHG fuel standard and carbon levy could win if put for a vote at IMO. Image Credit: Ship & Bunker

An analysis of submissions to the International Maritime Organization (IMO) by UCL Energy Institute’s Shipping and Oceans Research Group reveals a major shift in momentum, with nations controlling 70% of global shipping tonnage rallying behind a global fuel standard and carbon levy.

Recent proposals submitted ahead of the IMO's intersessional meetings and MEPC 83 indicate the emergence of two main camps—one supporting a global fuel standard (GFS) combined with a levy, and another favouring only the GFS with a credit trading scheme, rejecting a universal levy, UCL said in an email statement on Thursday.

“The former now has strong support from countries, comprising 70% of tonnage, a level of support which is important if a vote is called,” UCL said.

The IMO is set to hold an intersessional working group meeting from February 17-21, followed by another meeting in early April, a week before the key MEPC 83 session scheduled for April 7-11.

These meetings will focus on negotiations for the IMO's mid-term measures for GHG reductions, which could include a technical element such as a global fuel standard and an economic element like a carbon levy.

IMO member states aim to finalise these measures during the 83rd Marine Environment Protection Committee (MEPC 83) meeting in April, paving the way for formal adoption in October 2025.

Several EU countries, Japan, Panama, Nigeria, Liberia, and many others support the global fuel standard (GFS) and carbon levy, with a general consensus emerging around a $150/mtCO2e levy.

Meanwhile, countries like China, the UAE, Argentina, Norway and Brazil oppose the carbon levy and instead back a credit trading scheme as an alternative approach.

“With 70% of tonnage now supporting a global fuel standard along with a carbon levy, it is crucial that the upcoming round of negotiations focuses on discussing the distribution of revenues, both within and outside the shipping sector,” Dr Annika Frosch, Research Fellow at the UCL Energy Institute, said.

A key point of contention at the IMO is whether revenue generated from the proposed measures should be reinvested exclusively in the shipping sector or allocated more broadly to support food security and mitigate economic impacts on vulnerable states, UCL said.

A joint study by UCL, the French think tank Institute for Sustainable Development and International Relations (IDDRI), and the French agricultural research organisation CIRAD suggests that the IMO’s mid-term measures could lead to higher transportation costs, potentially impacting least developed countries (LDCs) and small island developing states (SIDS).

In the short term, these increased costs could threaten food security in vulnerable nations, while the long-term effects remain uncertain.