Last week, the International Maritime Organization (IMO) reached a huge milestone. After many years of negotiations, the organization of 176 member countries that regulates global shipping passed new rules to reduce greenhouse gas emissions (GHGs) and reach net-zero emissions by 2050.  

Once formally ratified, these regulations will legally bind all international vessels over 5000 gross tonnes and will create pressure for all fleets to lower emissions and enhance their long-term competitiveness.  

This is a major moment for the shipping industry, which is integral to trade but currently runs on some of the dirtiest fuels. The success of these measures is far from guaranteed, however, due to design gaps in the regulation and to the delicate multilateral steps required for implementation. 

The regulations are structured in a way that will be familiar to Canadian industries and policy makers who already monetize investments in low-emission fuels and technologies through initiatives such as the Clean Fuel Standard and Alberta’s TIER (Technology Innovation and Emissions Reduction Regulation). Essentially, ships have three options:  

• comply with the carbon intensity standard and avoid any penalties; 

• use zero- and near-zero emission technologies and fuels to do better than the standard and be rewarded;  

• fail to comply with a carbon intensity standard and pay a penalty of $380 per tonne on any CO2-equivalent emissions above a baseline carbon intensity level, and $100 per tonne for ships in a second tier.  

Compliance payments will go to the IMO Net-Zero Fund, which will be used to support zero- and near-zero fuels and technologies, training, and transition initiatives in developing countries. 

The fact that the regulations exist at all is a victory for multilateralism and climate action at a time when both are sorely needed. Actions matter, and starting somewhere—even somewhere imperfect—will position the marine sector for the energy transition. Recognizing the importance of assisting climate-vulnerable populations, as the agreement does, is also crucial because the climate impacts on coastal lives and livelihoods around the world are immense.  

At the same time, there is cause for future concern in the regulations as written and the process that led up to them. For example, the fuel standard allows liquefied natural gas (LNG) and biofuels to be considered low-carbon fuels for compliance purposes in the near term, even though neither of these fuel pathways can lead to net-zero by 2050. Although burning LNG produces less carbon than some other fuels, unburned methane—a potent greenhouse gas—escapes throughout LNG’s lifecycle, from production to combustion. Meanwhile, growing crops for biofuels is not a good use of land and potentially contributes to the destruction of carbon sinks.  

Categorizing these fuels as “low carbon” will not only reduce the amount of money going towards the transition and to developing countries, but also delay the uptake of real zero-emission fuels and technologies. The IMO can at least partially resolve this through updated emissions guidelines that exclude LNG and biofuels from the definition of zero-and near-zero fuels, and which also more accurately account for the full lifecycle carbon intensity of these and other fuels.  

In terms of the process to reach the agreement, the United States did not participate in the late stages of negotiations or the vote, and Saudi Arabia, Russia, Venezuela voted against the regulations. It is difficult although not impossible to contemplate the effective implementation of a global agreement where the US sits on the sidelines. At the same time, many EU countries, the UK, Canada, China, India, and Brazil voted for the regulations, and the next rounds of ratification and implementation will require at least the same level of multilateral resolve. 

What does this mean here in Canada? Mainly, we need to show the same level of ambition and leadership domestically as we’ve demonstrated internationally. Canada currently has no concrete plan to reduce emissions in domestic shipping, despite Transport Canada’s ongoing commitments to develop a Marine Climate Action Plan. The marine sector in Canada has fallen well short of other sectors in the country, and now it’s falling short of the IMO strategy and regulations that the government itself helped negotiate.    

We can fix this by building on lessons learned internationally and from our own experience. In terms of the carrot, climate funds are useful—if the criteria mandate best-in-class projects. Too often these funds are susceptible to fossil-fuel and industrial lobbies that can game applications for activities they had already planned. As for the stick, government regulation and carbon pricing work, but they require an environment of certainty to drive large-scale investments in the requisite technology and infrastructure.   

While IMO decisions are important, what happens next depends on the actions of individual countries. Canada has done a lot of good work to push the global community towards this plan—now begins the challenge of seeing ratification through and implementing the regulations in an ambitious, meaningful way.     

Amy Nugent is Oceans North’s acting director of marine climate action.