Global Shipping Emissions Fee Could Raise 10 Billion Dollars Annually as Equity Concerns Persist

A global fee on emissions from international shipping, approved earlier this year by the International Maritime Organization (IMO), is expected to generate up to 10 billion dollars per year starting in 2028. While the move is being viewed as a major advancement for climate action within the maritime sector, new concerns are emerging about how the funds will be used and whether they will truly support the countries most vulnerable to climate change.

A new report released today by climate NGO Opportunity Green, titled A Just and Equitable Transition for Shipping, outlines how the funds raised through the IMO’s emissions pricing mechanism should be distributed to ensure justice and equity in the global climate response. The report warns that without strong safeguards, a large share of the revenue could be redirected back to major shipping companies as financial rewards for adopting low or zero carbon fuels and technologies.

The new emissions measure is part of the IMO’s Net Zero Framework, a regulatory package aimed at cutting greenhouse gas emissions from international shipping. It is set for final adoption in October and includes a tiered fuel standard with a pricing mechanism applied to a portion of the sector’s emissions. While it has been praised as a positive step that reflects the polluter pays principle, the measure applies to a limited volume of emissions. This has led to a lower revenue forecast than many climate vulnerable nations had hoped for during negotiations.

As global leaders gather this week in Sevilla, Spain, for the 4th International Conference on Financing for Development, discussions around fair climate finance are expected to intensify. Advocates are calling for shipping’s newly created revenue stream to be integrated into these broader efforts to reform global financial flows in a way that prioritizes countries already facing climate hardship.

Emma Fenton, Senior Director of Climate Diplomacy at Opportunity Green, noted that existing plans allow for the majority of funds to be used as incentives for companies that have already invested in green technologies. “There is a real risk that this becomes a subsidy for already profitable shipping companies, rather than a tool for equity. A high share of the funds must be allocated to climate adaptation and resilience in the countries that need it most,” Fenton said.

The report features four case studies that illustrate how different types of nations could benefit from the fair allocation of revenues under the IMO Net Zero Fund. These include Chile, Nigeria, Belize and Vietnam, which represent geographically remote economies, oil dependent states, small island developing states and coal reliant countries with renewable energy potential.

Nigerian climate activist Olumide Idowu stressed the need for targeted climate finance in his country. “Communities in Nigeria are facing floods, desertification and growing food insecurity, yet barriers remain in the shift to clean energy. The IMO Fund can play a critical role in supporting adaptation and unlocking solar energy potential in a conflict-sensitive way,” he said.

Marcelo Mena of the Global Methane Hub emphasized the importance of long term funding for emerging green industries. “Chile has enormous potential in green hydrogen, but we need investment to move forward. The IMO Framework is proof that multilateral action is still possible. With the right use of funds, this could support not only maritime decarbonization but also broader emission cuts,” he said.

While the IMO framework includes a provision to reward the use of zero and near-zero emission fuels, critics argue that this risks diverting the majority of funds back to already wealthy industry players. Opportunity Green’s recent analysis found that the world’s ten largest publicly listed shipping companies made more than 300 billion dollars in profits from 2019 to 2023 while paying just 30 billion dollars in taxes.

The organization is urging member states to ensure that the design of the funding mechanism prioritizes adaptation, resilience and capacity building in developing countries. This, they argue, is the only way to fulfill the IMO’s commitment to a just and equitable transition, first set out in the 2023 greenhouse gas strategy.