The UN's net-zero emissions target and the Trump administration's efforts to reorganize the US transportation system have led to speculation that an international transportation crisis could occur.
Discussions are underway ahead of the International Maritime Organization's (IMO) meeting on new rules to reduce greenhouse gas emissions in the shipping sector. As a specialized agency of the United Nations focused on setting universal standards for maritime safety and security, the IMO plans to make fuel standards and financial penalties for non-compliance mandatory for ships over 5,000 gross tons. Ships covered by the regulations account for approximately 85 percent of global emissions from the shipping industry. Penalties have been set at $100 per ton above the first threshold and $380 per ton above the second threshold.
Regulations can significantly reduce greenhouse gas emissions from shipping
The IMO announced that shipping is responsible for 2.89% of global human-caused emissions. It is predicted that the regulations to be implemented could reduce greenhouse gas emissions from shipping by 40%. This means that if everything goes according to plan, the regulations will reduce global greenhouse gas emissions by approximately 1%.
The new regulations will come into effect in 2027 and will give ships a relatively short period to comply. According to shipping companies, fines could reach approximately $20 to $30 billion per year by 2030, while some commentators suggest that if the global fleet fails to meet even a small target of 10%, total fines could exceed $300 billion by 2035.
Over 90% of the current global fleet uses traditional fuels and cannot use more environmentally friendly alternatives. Retrofitting existing ships is expensive, and some may prefer to pay fines instead. According to estimates, investments are expected to reach up to $1.9 trillion to meet the International Maritime Organization's (IMO) 2050 emissions targets.
Finally, it is estimated that alternative green fuels are at least three to four times more expensive than traditional fuels. This is also expected to increase fuel costs by 350%.
