THE International Maritime Organization meets next week for its second-last set of climate talks before April, when it is due to approve the bones of a global carbon price and green fuel standard for shipping.

Why it matters:

Decarbonising the shipping industry is impossible without regulation to close the price gap between fossil fuels and green fuels, which are roughly five times dearer.

The IMO’s 2023 GHG Strategy, which isn’t legally binding, directs it to approve a basket of mid-term measures this year, to enter into force in 2027.

Next week, the 18th intersessional working group on greenhouse gas emissions, ISW-GHG 18, will see countries try to hammer out legal text on new measures for approval at MEPC83 in April, and adoption in October.

These are:

• A technical measure, probably a GHG fuel standard (GFS) to limit the carbon intensity of ships’ energy use over time.
• An economic measure to price emissions.

What are the options on the table?

The IMO is roughly divided into two camps: those in favour of a GFS combined with a GHG levy, and those who want a GFS alone.

• Around 50 countries and the European Commission have consolidated their plans for a carbon levy and a fuel standard into one proposal. No price per tonne has been agreed yet, but suggestions range from $18.75 to $150.
• GFS-only fans include Argentina, Brazil, China, Norway, South Africa, UAE and Uruguay. Their proposal would work by charging for carbon credits, possibly with pooling for easier compliance.

Climate progressives and shipping industry groups tend to want a high levy, while big oil states and opponents of green regulations tend not to.

The UCL Shipping and Oceans Research Group’s deep-dive analysis on the different measures is available here.

When will we see results?

Not next week and maybe not by April’s MEPC either, barring a big surprise.

The big questions — what regulation will the IMO adopt? How will it work? How do I comply? Where does all that money go? — will probably be left to the last minute of the extraordinary MEPC in October.

The IMO wants consensus, which makes its deliberations painfully slow. It also wants to avoid big votes that could expose tensions between states.

This means agreeing on the broad strokes of how the GHG rules will work and leaving the thornier details until later, in essence working in slow circles from the outside in.

Recent debates have touched on how much revenue should go to developing green shipping technology and infrastructure, and how much to helping poorer countries with the economic costs a levy or other carbon price could impose.

But basic details are still up in the air. South Korea has estimated a GHG levy at $18.75 per tonne would bring in $11.9bn in 2030, while at $150 the IMO would rake in a whopping $95.3bn, “the largest single environmental fund ever proposed”.

So what are we ‘approving’ in April, exactly?

The approval due at MEPC83 merely means approving a package of potential Marpol amendments for circulation among the parties, for adoption six months later.

International Chamber of Shipping deputy secretary-general Simon Bennett said a vote at the October MEPC was possible, “but they would really, really wish to avoid that”.

Bennett said the IMO did not want the optics of having an agreement without the buy-in of big economies like China and the US. “It would be very hard to claim that that’s a genuine global agreement, which is what we’re trying to see,” he said.

Last year, MEPC81 produced a draft legal text of a Net Zero Framework, essentially a set of chapter headings with the detail still to be filled in.

This year’s meetings will have hundreds of people working day and night to agree on a ‘clean’ text so that the IMO has something it can plausibly approve in April.

Time is short. ISW-GHG 18 runs from February 17-21, ISW-GHG 19 from March 31-April 1, and MEPC83 from April 7-11.

MEPC83 will also have other agenda items to get through, so not even its full week is available.

The hope is that the IMO can at least get the foundations right now, then refine the measures over time. A low carbon price can be increased once the system for charging it is in place, the thinking goes.

What if this fails?

The IMO has talked about cutting emissions for around 15 years, but this year it has to deliver.

Failure would undermine its credibility and give regional blocs such as the EU an incentive to tax shipping themselves. The potential sums on offer would be vast and tempting for governments.

This would create the dreaded patchwork of overlapping, contradictory regulation the industry has warned against for years. It would impose higher cost and admin burdens on companies and delay the switch to greener fuels and technologies.

It is now up to the member states to make sure that doesn’t happen.