Luis: Hi. Welcome to the "Biofuels Report" podcast series where we discuss all things biofuels. My name is Luis Grande and I'm a marine field reporter at Argus Media here in New York.
Natalia: Hello, my name is Natalia Coelho. I also cover marine fields in Argus, but from the other side of the hemisphere, directly from São Paulo, Brazil. Today, we are going to discuss a proposed pricing mechanism that would affect the marine fields market.
Luis: Between October 14th and 17th, the International Maritime Organization's Marine Environmental Protection Committee will meet in London to approve or change the global greenhouse gas pricing mechanism proposal, which would enter into force beginning in 2028. Natalia, can you explain what this proposal is?
Natalia: Sure. The mechanism proposal establishes a two-tiered NIV for carbon dioxide emissions, but it also gives [inaudible 00:01:08] units for overcompliant vessels. The proposal was approved in April and 63 nations voted in favor, including European Union states, the United Kingdom, China, and India. However, 16 members opposed, including Medisgo states, Russia, and Venezuela, and 24 countries abstained from voting. But another thing caught attention in this meeting, the U.S. absence.
Luis: That's correct, Natalia. The U.S. decided to skip the meeting and did not vote on the IMO plan. Instead, the U.S. sent a statement opposing the proposal. According to that statement, U.S. President Donald Trump said that the country will not accept this international environmental agreement because, according to him, it will unduly or unfairly burden the U.S. and the interests of the American people.
Natalia: And at the beginning of August, the U.S. State Department said again that the country will not accept IMO's proposal and that the NIV would benefit China by requiring the use of alternative bunker fuels that are unavailable at a global scale.
Luis: The U.S. pushback could induce countries that were previously in favor of or uncommitted to the plan to reject it, market participants told Argus. Since Trump's position may sway key middle-ground states that are major vessel flag states such as Panama, Liberia, and the Marshall Islands, Liberia was absent from the vote while Panama voted in favor of the proposal. Panama, Liberia, and the Marshall Islands, which register many ships, have an important say in global shipping rules. But their decisions could be influenced more by money, politics, and pressure from powerful countries like the U.S. and Saudi Arabia than by environmental concerns.
Natalia: The IMO's April 2025 approval was not anonymous, a common outcome for climate-related proposals, where member states often disagree on ambition, fairness, or economic impacts. The IMO will meet later this month to once again vote on this plan, and it is likely to get the two-thirds vote needed to pass. If the proposal gets adopted, the maritime industry will become the first transport sector to implement internationally-mandated targets to reduce greenhouse gas emissions.
Luis: The U.S. will likely pressure other countries who abstained in the previous vote in April to switch to a no vote. This is because abstentions votes are not counted towards the majority that is needed to pass the proposal. For example, if 103 countries attend the meeting and 24 abstain, only 79 votes are counted and only 53 yes votes would be needed to reach the two-thirds threshold.
Natalia: There is also a [inaudible 00:04:05] group that publicly came out in support of the IMO proposal.
Luis: Yes, that's right. The Getting the Zero Coalition, which is a group of more than 200 companies and organizations that support getting zero-emission vessels into operation and pushing the IMO to adopt policies that will cut greenhouse gas emissions, they said if the IMO does not adopt this proposal, it will disrupt momentum towards a zero-emissions future in the maritime industry and possibly stall investments made towards that goal.
Natalia: Members of this group include Shell and Danish shipping company AP Moller-Maersk, who said they have ordered those chartered, new-built ships that will be able to use alternative bunker fuels. This is likely one of the reasons why they are supporting the IMO plan.
Luis: Argus will be in person at these meetings and will file its outcomes.
Natalia: But you can find more information about the IMO proposal on our website, argusmedia.com.
Luis: Take care.
Natalia: Bye.
