Shipping faces first-ever global carbon fee
This week, the International Maritime Organization votes on a landmark proposal: A global carbon levy on shipping emissions. What will it mean for Norway?
Net-Zero Framework
Net-Zero Framework will be mandatory for large ocean-going ships over 5,000 gross tonnages, which account for 85 percent of international shipping emissions. two key components:
- A global fuel standard, requiring ships to gradually reduce the carbon intensity of their fuels.
- A carbon pricing mechanism that puts a price on emissions, encouraging shipping companies to invest in cleaner fuels and technologies
The proposed Net-Zero Framework (NZF) is a huge step toward establishing a legally binding system to reduce greenhouse gas emissions from ships worldwide, aiming for net-zero by around 2050.
Global attention
The proposal has drawn worldwide attention, with U.S. officials reportedly threatening tariffs and retaliatory actions against countries supporting the measure.
If adopted, it will mark the first-ever international climate fee for a single industry – a move with major implications for trade, competitiveness, and Norway’s shipping sector.
The IMO’s levy will reshape how the world’s fleets operate — and who pays for the transition.
Norway: Fourth-largest shipping nation
With Norway ranking among the world’s top shipping nations, the outcome could have significant ripple effects. Norway is currently the fourth-largest shipping nation globally by fleet value, and fifth when cruise vessels are included.
To understand what’s at stake, we asked Professor Haiying Jia and Assistant Professor Gabriel M. Fuentes how the new carbon levy could affect global trade and the competitiveness of Norway’s maritime industry.
Both are researchers at the Department of Business and Management Science and Centre for Shipping and Logistics.
leader in green shipping
`Norway has long positioned itself as a leader in green shipping. What could this decision mean for Norwegian shipping companies? ´
`While the Norwegian Shipowner Association, together with six other national shipowner associations, has expressed support for the NZF, the shipping industry as a whole may not fully endorse the framework´, Haiying Jia says.
`One key challenge lies in the difficulty of passing on to charterers – a challenge also faced by Norwegian shipping companies. What’s especially intriguing now is how the IMO will react to the US’s action plan announced on 10 October, she adds.
The US government has signaled potential actions such as imposing port fees on vessels owned, operated, or flagged by countries supporting the framework.
`This action plan will affect a wide range of companies and trade activities. Combined with opposition from other countries, the IMO NZF carbon levy will likely be delayed or put on hold´, Jia explains.
`Help level the playing field internationally`
Gabriel Fuentes points out that Norwegian shipping companies are already exposed to regional carbon regulations and taxation mechanisms.
IMO
IMO – the International Maritime Organization – is the UN specialized agency with responsibility for the safety and security of shipping and the prevention of marine. 176 member states. Norway has been a member since 1958.
`The adoption of a global framework would help level the playing field internationally. The expectation—also expressed by the European Union—is that the EU will support the IMO proposal and work toward aligning its own regulatory framework with emerging international standards` he says.
This support follows the statement delivered by the US Government on penalizing countries, individual and registries supporting the IMO initiative, according to Fuentes.
Not perfect
`The IMO secretary-general admitted that the framework is “not perfect”. What, in your view, are the biggest challenges ahead? ´
`The proposed carbon levy under the NZF faces significant fundamental challenges – far more than merely being “imperfect” ´, Jia says.
`Because the framework focuses on life-cycle emission accounting, there are currently no green fuels expected to be viable in the foreseeable future. No single stakeholder, such as shipowners, can shoulder the high level of uncertainty involved in investing unproven technologies and infrastructures for green fuels that have yet to reach scalable commercial viability´.
According to Fuentes, the current geopolitical trade tensions are reflected in the ongoing IMO discussions. He points to three clear fronts that have emerged:
- Some shipowners are seeking to delay the framework
- A significant group of countries view it as a key instrument to align international shipping with the Net Zero 2050 strategy.
- The United States is attempting to reassert its influence by opposing the framework’s adoption and pressuring other countries to align with its position
`The framework is not perfect but sends the right signal´, Fuentes says.
`The challenge is that even in the best-case scenario—if it is approved—it may still lead to a fragmented policy environment, with regional blocs or individual countries opting to implement their own carbon regulations rather than adhering to a standardized global approach. The worst-case scenario would be that the vote fails, affecting years of discussion and undermining the broader decarbonization agenda´, Fuentes says.
As seen in previous episodes, he notes, the U.S. has come to recognize the strategic importance of maritime transport in advancing its geopolitical interests.
`As the regulation moves toward ratification and enforcement following a majority vote this week, these contrasting positions could lead to a fragmented landscape. After the vote, substantial lobbying and negotiations will be required to reconcile the different agendas´, he concludes.