In a landmark move, countries under the United Nations' shipping arm have reached a consensus on setting a global fuel emissions benchmark for the maritime industry. The deal introduces penalties for vessels exceeding emissions limits and rewards ships that run on cleaner fuels.

This agreement, brokered at the International Maritime Organization (IMO) in London, comes despite the U.S. walking out of the talks and calling on others to do the same. Washington even warned of "reciprocal measures" against any levies imposed on American ships.

Nevertheless, the majority of IMO member states backed the proposal, aiming to slash international shipping’s net greenhouse gas emissions by 20% by 2030 and fully eliminate them by 2050.

Starting in 2028, vessels that exceed the designated emissions threshold will face a $380 penalty per metric ton of excess CO2-equivalent released, along with an additional $100 per ton for surpassing a tighter emissions cap. Final ratification of the plan is scheduled for an IMO meeting in October.

The debate exposed deep divisions among countries on how aggressively the shipping industry should decarbonize. A more ambitious global carbon tax—championed by climate-threatened Pacific nations, the EU, and the UK—was ultimately shelved following resistance from major economies including China, Brazil, and Saudi Arabia.

From 2030, the new rules will demand that ships reduce the carbon intensity of their fuel by 8% compared to 2008 levels, with a more rigorous standard requiring a 21% cut. By 2035, those benchmarks will rise to 30% and 43%, respectively.

Ships that outperform the stricter standard will earn credits, which can be sold to less efficient operators, effectively creating a carbon trading market within the maritime sector. Revenue from emissions penalties, potentially reaching $40 billion annually by 2030, will be funneled into making zero-emissions fuels—currently expensive and scarce—more accessible.

The agreement sparked a spectrum of reactions. The European Commission called it "a meaningful step" toward Paris Agreement goals, though still short of fully aligning the industry with climate science. UK Transport Minister Heidi Alexander hailed it as a motivator for cutting emissions and accelerating clean fuel innovation.

Yet some, including Vanuatu’s climate minister Ralph Regenvanu, expressed disappointment. He argued the agreement fell short of putting global shipping on a course aligned with limiting warming to 1.5°C—considered essential to avoid the worst impacts of climate change.

While scalable green fuels like green ammonia and methanol remain limited, analysts say LNG and biofuels will serve as transitional options under the new rules. Still, not all observers are convinced. Environmental group Opportunity Green warned the deal risks locking the sector into the use of first-generation biofuels and LNG, which are not truly carbon-neutral.

Aoife O’Leary, head of Opportunity Green, stressed the need for a sharper pivot: “The only sustainable route to net zero for this sector—one that doesn't undermine ecosystems—is green hydrogen-derived e-fuels.”