THE global carbon price set to be imposed on shipping next week will probably take the form of a fuel standard without a separate carbon levy, although supporters of the latter are still hoping for a miracle.

Climate talks at the International Maritime Organization this week centred on the so-called ‘J9 bridge’ proposal by Singapore and ISW-GHG chairman Sveinung Oftedal, of Norway.

If this policy outline is approved at MEPC83 next week, such a greenhouse gas fuel standard (GFS) would set compliance tiers for GHG intensity that ships would have to meet or pay a penalty.

Delegates are set to spend the intervening days in informal talks to hash out the scope, stringency and cost of compliance (in remedial units, or RUs) with those tiers.

Sources said as such details are yet to be filled in makes it hard to gauge whether the final regulation will work.

“There’s no clarity yet about what the cost of RUs or penalties for undercompliant ships would be, or agreement on the numbers and dates for the required GHG intensity reductions,” an industry source told Lloyd’s List.

“It makes it impossible to actually assess or evaluate what the cost implications would be for the industry and whether or not this will achieve the decarbonisation objectives of the IMO.”

The Pacific Islands bloc pushed back, proposing the fuel standard should cover all emissions from 2040. But Oftedal did not formally accept its paper for further discussion, sources said.

Industry groups, Pacific nations and green NGOs have long backed a flat levy on GHG emissions, arguing it would be simpler and help secure investment in making green fuels than a credit-trading scheme.

The two-day ISW-GHG19 meeting, which finished late last night in London, started with a majority of countries in favour of a levy, at least on paper. The bones of a levy are still in the current draft legal text, meaning it is technically still on the table.

But the European Union abandoned its collective support for a levy in response to long-standing opposition from China, the US, Brazil, Saudi Arabia and others.

EU delegates feared such countries would never accept a levy and could exempt themselves under Annex 16 of Marpol rather than agree to be bound by one.

“I think it’s fair to say the levy is not going to happen,” a dejected industry source said.

Defenders of the GFS say the scheme could still work like a levy if it is calibrated to cover a broad-enough scope of emissions.

“The level of ambition has not changed from our side,” a European source said.

“I’m still optimistic we could manage an agreement which will bring everybody on board, including the Pacifics, because the revenues will be there.”

The Pacific Islands do not see it that way.

In a statement, Marshall Islands ambassador Albon Ishoda said a growing bloc of countries, particularly from Africa, the Caribbean, Central America and the Pacific, was “united in its focus on delivering ambition and equity for the global south”.

“But when it comes to equity, our voices continue to be ignored,” Ishoda said.

“I have real concerns that the package being shaped may not be one that truly protects the most vulnerable or ensures no one is left behind.”

Much will depend on the informal talks this week, since the important negotiations started only yesterday afternoon.

A group that is starting to be called the APC+ group (Africa, Pacific, Caribbean and others) will fight on for a levy. But sources said they feared realpolitik was taking over.

A source said the talks were starting to resemble UNFCCC negotiations (those that take place at COP meetings) rather than IMO meetings; which he characterised as “negotiation by text” by countries with fixed political positions, running down the clock to force their opponents to back down.

Another complained: “It feels like a lot of theatre to effectively end up where we were at the start of the week. The options are the same, the values are the same, the outcomes may be the same, but we’re just working in a different architecture.”

MEPC83 starts on Monday. The regulation it approves is due to be adopted in October to enter force in 2027-2028.