The International Maritime Organization (IMO) is a specialised U.N. agency responsible for maritime safety and preventing marine pollution from shipping. 7 months ago, in April 2025, IMO approved the first global carbon pricing mechanism aimed at reducing greenhouse gas (GHG) emissions from international shipping. IMO’s policy-making committee is known as the Marine Environment Protection Committee (MEPC).
During its 83rd session, the MEPC approved a draft amendment to include the ‘Net-Zero Framework’ in Annexe 6 of the IMO treaty. The International Convention for the Prevention of Pollution from Ships (MARPOL) accepted this draft amendment by a majority vote. This framework aims to achieve industry-wide adoption of zero- or near-zero-GHG fuels, technologies and energy sources. This will be achieved through a GHG pricing mechanism by the year 2050. Although the measure had been slated for full adoption one year after a narrow majority of member states voted in favour of Saudi Arabia’s motion to adjourn, it has not yet been implemented. The adjournment reflected mounting political pressure & shifting positions among key member states, which included major oil-producing countries. Moreover, while the USA has not historically been an influential participant in the IMO, recent threats by the Trump administration to impose retaliatory tariffs & sanctions on states supporting the Framework have been cited as contributing factors to the delay. Despite this postponement, the IMO continues to advance the technical elements of the Net-Zero Framework and has urged member states to work toward achieving a consensus.
This article argues that IMO’s proposed global carbon pricing mechanism, which is formally structured as a regulatory contribution, should continue to function in substance as a global carbon tax on the maritime shipping industry. Although administered by a non-sovereign body, the mechanism mimics key characteristics of a tax through mandatory emissions-based payments and the redistribution of revenues. The equivalence has important legal implications for the role of a non-sovereign body. This equivalence has important legal implications for the role of a non-sovereign entity in regulating a multinational industry. Rather than address whether the scheme will sufficiently reduce emissions, this article analyses the legal implications of treating the pricing mechanism as a tax and whether it could serve as a model for global governance in other industries.
To fully understand the scope of this article’s analysis, it’s initially necessary to consider the overall structure of the IMO’s proposal. Embedded within its net-zero framework, the 2-tier emissions pricing system applies to vessels over 5,000 gross tonnes, which account for 85% of the total CO₂ emissions from international shipping. These vessels must meet a specific GHG fuel intensity (GFI) target, which measures GHG emissions per unit of carbon dioxide equivalent (CO₂e) as determined by a multipart calculation. The proposal sets two levels of fuel standards, based on a multipart calculation. The proposal sets two levels of fuel standards, a base target and a stricter direct compliance target. These targets form the basis for imposed financial levies on ships that exceed allowable emissions levels.
Using these two tiers, the mechanism works by imposing costs based on how much ships exceed the target annual GFI. Ships with a GFI compliance balance lower than both the base target and the direct compliance target do not have to contribute to the net-zero fund. Ships with a GFI that falls between the base target and the direct compliance are required to purchase remedial units at a tier 1 pricing rate of $100/tonne of CO₂e. If a vessel’s GFI exceeds both the base target and the direct compliance target, the ship incurs remedial units priced under tier 1 pricing plus additional remedial units priced at tier 2 rates of $380/tonne CO₂e for emissions above the base target.
