COP29: IMO Secretary-General confirms pricing mechanism

"Yes, there will be a pricing mechanism," the International Maritime Organization (IMO) Secretary-General, Arsenio Dominguez, said on the sidelines of COP29 in Azerbaijan.

PHOTO: (L-R) Andreas Enger of Höegh Autoliners; IMO Secretary-General Arsenio Dominguez and Knut Arild Hareide of Norwegian Shipowners Association at COP29. LinkedIn of Norwegian Shipowners Association

The IMO member states drafted Chapter 5 of MARPOL Annex VI, which outlines regulations for the IMO’s net-zero framework at the MEPC 82.

These regulations may incorporate mid-term measures, including an economic measure like carbon pricing and technical measures like a greenhouse gas fuel intensity (GFI) standard.

Now, shipping’s global regulator has confirmed that mid-term measures will indeed incorporate a pricing mechanism, according to a social media post by the Norwegian Shipowners Association.

As part of its recommendations, the Norwegian Shipowners Association's chief executive, Knut Arild Hareide, along with international adviser Kai Simon Eikli Yuen, backed the technical measure under consideration as a complement to the pricing mechanism.

The association also urged that revenues from the pricing mechanism be allocated towards developing low- and zero-emission fuels and technologies, with the ultimate goal of closing the price gap between conventional and emerging fuels.

While Dominguez did not confirm specific details of the pricing mechanism, a recent report by University College London (UCL) indicated that several policy options are under discussion at the IMO.

For instance, the island nations and least developed countries have proposed a fixed carbon levy at $150/mtCO2e. This level is also backed by the Clean Shipping Coalition. The EU has expressed support for a carbon tax but has not specified a rate.

On the flip side, some South American and Southeast Asian nations and countries like China and India oppose a carbon tax.

The IMO aims to adopt Chapter 5 at MEPC 84 in October next year, paving the way for mid-term measures to be implemented by 2027.

By Konica Bhatt

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