18 April 2024

IMO Discusses Alternatives For Decarbonization Of The Maritime Transport Sector

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Following discussions during the 81st meeting of the Marine Environment Protection Committee (MEPC 81), which took place March 18–22, 2024, member states of the International Maritime...
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Following discussions during the 81st meeting of the Marine Environment Protection Committee (MEPC 81), which took place March 18–22, 2024, member states of the International Maritime

Organization (IMO) agreed on a draft net-zero standard (IMO net-zero framework) for the total reduction of net greenhouse gas (GHG) emissions from international maritime transport by 2050, in line with the strategy adopted by IMO in 2023, during MEPC 80 (IMO 2023 Strategy).

In addition to the net-zero target established for 2050, the IMO 2023 Strategy also established a commitment to ensuring an increase in the supply of clean, low-carbon fuels by 2030, as well as intermediate targets for reducing GHG emissions by at least 20% by 2030 (making progress toward 30%) and at least 70% by 2040 (making progress toward 80%).

However, the main provision of the approved draft of the IMO net-zero framework is the commitment to create the world's first global carbon tax, which will be used to finance the energy transition of international maritime transport and reduce the disparity between prices of traditional fuels and low-carbon fuels.

In a consensus vote, IMO member states set out the decisions that still need to be made about carbon pricing in shipping, including how to calculate a price, how to charge it, who would collect it, and which fuels are considered low-carbon. The IMO member states are looking at different proposals in which the price per ton of GHG ranges from $20 to $250.
MEPC will meet again between September 30 and October 4, 2024, (MEPC 82) to continue negotiations, and IMO estimates that a final decision on the carbon pricing should be made by next year.

Ocean shipping is responsible for about 3% of all GHG emissions, and 90% of all goods are transported by sea. For countries that have their economy based on commodities, the carbon tax could add the considerable challenge of increased freight costs. The fact that today more than 70 nations already have individual carbon taxes or emissions trading systems in effect adds complexity to the discussion.

The lawyers of the Environmental, Climate Change and ESG, and Maritime practices of Tauil & Chequer Advogados, in association with Mayer Brown, are available for additional information.

Visit us at Tauil & Chequer

Founded in 2001, Tauil & Chequer Advogados is a full service law firm with approximately 90 lawyers and offices in Rio de Janeiro, São Paulo and Vitória. T&C represents local and international businesses on their domestic and cross-border activities and offers clients the full range of legal services including: corporate and M&A; debt and equity capital markets; banking and finance; employment and benefits; environmental; intellectual property; litigation and dispute resolution; restructuring, bankruptcy and insolvency; tax; and real estate. The firm has a particularly strong and longstanding presence in the energy, oil and gas and infrastructure industries as well as with pension and investment funds. In December 2009, T&C entered into an agreement to operate in association with Mayer Brown LLP and become "Tauil & Chequer Advogados in association with Mayer Brown LLP."

© Copyright 2024. Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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