Ships must limit CO2 emissions under new UN deal

Countries at the UN shipping agency struck a deal on Friday on a global fuel emissions standard for the maritime sector, which will impose an emissions fee on ships that breach it and reward vessels burning cleaner fuels.

The U.S. pulled out of the climate talks at the International Maritime Organization in London this week, urging other countries to do the same and threatening to impose "reciprocal measures" against any fees charged to U.S. ships.

Despite that, other nations approved the CO2-cutting measures to help meet the IMO's target to cut net emissions from international shipping by 20 per cent by 2030 and eliminate them by 2050.

A majority of countries at the IMO voted on Friday to approve a scheme that will set two emissions limits from 2028 — one main limit that all ships are expected to meet and a second stricter emissions limit. Ships that reduce emissions to below this stricter limit will be rewarded.

Although agreement was reached, the climate talks exposed deep rifts between governments over how fast to push the maritime sector to cut its environmental impact. A proposal for a stronger carbon levy, backed by the European Union and Pacific nations, was dropped after opposition from countries including China, Brazil and Saudi Arabia, delegates told Reuters.

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How the emissions standards will work

Under the agreement, if ships emit more than the first limit, they will face a penalty of $527 per tonne ($380 US) on every extra tonne of CO2 equivalent they emit. Ships will face a lower penalty of $139 a tonne ($100 US) on emissions that exceed the stricter limit but are still below the main emissions limit.

For example, in 2030 the main emissions limit will require ships to cut the emissions intensity of their fuel by eight per cent compared with a 2008 baseline, while the stricter standard will demand a 21 per cent reduction. By 2035, the main standard will cut fuel emissions by 30 per cent, versus 43 per cent for the stricter standard.

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Ships that more than comply with the stricter emissions standard will receive credits that they can sell to non-compliant vessels.

Nations including Saudi Arabia, Russia and Iran requested a vote on the CO2-cutting measures — an unusual move at the IMO, where decisions are usually taken by consensus without a vote.

Countries still need to give final approval to the measure at a meeting in October, before it can take effect in 2028.