Mentor’s Comment: The adoption of the Net Zero Framework, which is based on Market-Based Measure (MBM) by the International Maritime Organization (IMO) to regulate and reduce greenhouse gas (GHG) emissions from international shipping, marking a historic shift in global climate governance. It highlights the geopolitical negotiations, competing national interests, and the struggle to balance environmental effectiveness with economic fairness in formulating a global carbon levy on shipping emissions.

Today’s editorial talks about regulation of greenhouse gas (GHG) emissions from international shipping.  This topic is useful for GS Paper II (International Relations and Policy Making) and GS Paper III (Environment).

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Why in the News?

At the Marine Environment Protection Committee (MEPC-83) session of the IMO, a major step was taken by approving a new system to cut shipping emissions.

Why is it a landmark step? 

• First Legally Binding Global Emission Levy: Shipping is the first industry with a mandatory, global emissions levy under the MARPOL treaty—unlike aviation (ICAO) or manufacturing, which follow voluntary or regional norms.
• Equity Through CBDR-RC: The mechanism incorporates equity—ZNZ fuel users are rewarded, while underperformers bear the financial burden, aligning with developing countries’ interests.
• Clear, Time-Bound Targets: IMO sets concrete milestones: 40% cut in carbon intensity by 2030, 70% by 2040, and net-zero by 2050—unlike ICAO’s vague goals.

What were the challenges while taking this step?

• Resisted by the Oil-Exporting Nations: Countries like Saudi Arabia, which depend heavily on fossil fuel exports, opposed stringent carbon levies, fearing these would harm their economies. They resisted the transition to green fuels, advocating for minimal changes.
• Developed vs. Developing Countries: Developed nations like the EU supported aggressive emission reductions, while developing countries like China pushed for a market-driven approach to preserve competitiveness and avoid excessive financial burdens.

How is the shipping industry tackling emissions as per the IMO?

• Reduction of GHG emissions: The International Maritime Organization (IMO) has implemented measures like the Energy Efficiency Design Index and the Ship Energy Efficiency Management Plan to reduce carbon emissions from ships.
• Targets for carbon intensity: The IMO has set a goal to reduce carbon intensity by at least 40% by 2030 (compared to 2008 levels) and 70% by 2040, with the ultimate aim of achieving net-zero emissions by 2050.
• Green technologies and fuel alternatives: The IMO is pushing for cleaner fuels and innovative technologies for emissions reduction, including efforts in alternative fuels such as green hydrogen.

How will the Market-Based Measure (MBM) framework impact India’s maritime sector and trade costs by 2030 and 2050?

• Trade Costs: The MBM framework is likely to increase shipping costs due to carbon pricing and fuel surcharges, making Indian exports less competitive. Eg: Textile and agricultural exports from India to Europe may become costlier by 2030 due to EU’s Emission Trading System (ETS) expansion to maritime transport.
• Equity Concerns: Uniform carbon levies do not consider developmental disparities, placing a higher burden on countries like India with limited historical emissions. Eg: India has argued at the IMO that MBMs should reflect Common But Differentiated Responsibilities (CBDR), as it is still building infrastructure and trade capacity.
• Green Shipping Transition: To comply with decarbonization norms by 2050, India must shift to alternative fuels (e.g., green hydrogen, ammonia) and upgrade port infrastructure, requiring massive investments. Eg: Jawaharlal Nehru Port Trust may need to install green bunkering facilities and electrified cargo handling systems.
• Technological and Financial Gaps: Lack of access to clean technology and climate finance may hinder India’s ability to transition smoothly, increasing dependence on foreign solutions. Eg: Advanced nations may dominate green shipbuilding, while Indian shipyards lag due to lack of R&D support and capital.
• Opportunity for Green Growth: If supported with international finance and technology transfer, MBMs can stimulate domestic innovation and green job creation in maritime sectors. Eg: India’s “Green Ports” initiative could align with MBM goals and boost employment in clean energy, retrofitting, and logistics.

Way forward: 

• Differentiated Levy Design: IMO should adopt a flexible carbon pricing model that reflects Common But Differentiated Responsibilities (CBDR), allowing developing countries like India room to grow while contributing to climate goals. Eg: Tiered levy based on national capacities and emission intensity.
• Technology Transfer & Climate Finance: Establish dedicated funding mechanisms for green shipping innovation, infrastructure upgrades, and capacity building in developing nations. Eg: An IMO-led global Green Maritime Fund supported by developed countries.

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