June 30, 2025
A new report by Opportunity Green, examines how the revenues raised from IMO’s global fee on a portion of emissions from shipping, as part of a tiered fuel standard mechanism, could be distributed to maximise positive outcomes that support equity and justice.
According to the “A just and equitable transition for shipping” report, funds must be used flexibly and liberally to support climate-vulnerable countries to adapt to climate change and enhance resilience, not simply redistributed as rewards for the use of Zero or Near-Zero fuels and technologies (ZNZs) to the very shipping companies who have made record profits and paid unfathomably low taxes in the past five years.
Opportunity Green is calling for as high a proportion of revenues as possible to go to support adaptation and resilience in climate-vulnerable nations. This is the only way to enable a just and equitable transition for shipping – something that was promised in the 2023 IMO GHG strategy and must remain a priority as we move forwards
… said Emma Fenton, Senior Director of Climate Diplomacy at Opportunity Green.
The report demonstrates the significant and strategic needs in climate vulnerable nations that could be addressed in part via funds raised by the IMO pricing mechanism – and how the only way to guarantee a just and equitable transition is in how these funds are distributed.
The measure is set out in the IMO Net-Zero Framework, a major new regulation that aims to reduce greenhouse gas (GHG) emissions from international shipping. Due to be formally adopted in October, this is projected to raise around $10bn a year in revenue from 2028.
Hailed as a historic achievement, the agreement marks a notable move towards implementing the ‘polluter pays’ principle and could set an example for other sectors lagging behind, like aviation. However, the stringency and scope of the IMO measure means that fewer emissions will be priced, and significantly less money will be raised than many had hoped.
With a considerably smaller pot now available from this agreement than many climate vulnerable countries fought for, a critical next step at the IMO is to agree how exactly the funds will be disbursed.
The report contains four country case studies that show how different types of countries could be supported by the new IMO Net-Zero fund that will be established. The case studies also have relevance for other countries with similar geographic, social, economic or industrial profiles as the ones featured. They are:
- Chile: relevant for other countries geographically remote from their main markets.
- Nigeria: relevant for other oil-producing developing countries or those with untapped oil reserves.
- Belize: relevant for other Small Island Developing States (SIDS).
- Vietnam: relevant for other coal-dependent countries with high renewable potential.
Key revenue allocation areas for Chile
- Financing to de-risk investments in ZNZ fuel bunkering infrastructure.
- Broad-spectrum green hydrogen development programs, in alignment with the established priorities and methods of Chile’s Green Hydrogen Facility, potentially overseen by the Production Development Corporation of Chile (CORFO). It is crucial that the ‘energy system of shipping’ includes renewable feedstocks.
- Port efficiency upgrades to offset increased transport costs and reduce disproportionately negative impacts.
- Adaptation programmes, which are currently underfinanced in Chile, in particular those targeting water stress, which may be exacerbated by heavy renewable development.
- Education and training programs to ensure a just and equitable transition for seafarers, and increase green jobs in the ZNZ fuel sector.
Marcelo Mena, CEO of the Global Methane Hub, said that the IMO Fund could offer a much-needed long-term guarantee for Chile, a country with significant green hydrogen production potential, to help attract the necessary investments for expanding this promising industry and accelerating maritime decarbonisation. He emphasized that local government support would be essential to this process, noting that it was important to learn to walk before running.
Key revenue allocation areas for Nigeria
- Conflict-sensitive adaptation finance – augmenting existing funding streams that ensure stability and create an enabling environment for the deployment of renewables, in particular solar Photo Voltaics (PV), which has enormous untapped potential in the country.
- Port efficiency and resilience investment, both to offset the increased costs of transport, and potential impacts on food prices.
- It may be difficult to offset DNI solely through investment in the maritime sector. Taking into account the existing pressure on food supply and affordability in the country, investments into food security elsewhere along the supply chain may be more appropriate and effective, and may be possible within the text of the proposed amendments to MARPOL Annex VI.
The IMO Net-Zero Fund presents a unique opportunity to support conflict-sensitive adaptation and unlock our enormous potential in solar energy. We urge the international community to ensure that the revenues from shipping’s transition are used to drive a just and equitable transition in countries like ours
… commented Olumide Idowu, a Nigerian youth campaigner and climate change activist.
Key revenue allocation areas for Belize
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Food security and climate-resilient agriculture: climate change poses a significant threat to the viability of agriculture in Belize, which provides much of the domestic food supply and about 11% of total employment in the country. As the IMO decarbonisation measures may slightly increase the cost of imported food and introduce a secondary threat to food security, there is a strong case for revenue disbursement aimed at offsetting this. Overall, Belize’s adaptation needs (for all sectors) have been estimated at $158.8m – small compared to the potential scale of the revenues.
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Infrastructural resilience: Belize’s ports are concentrated in population centres, meaning that wider benefits can be provided by making the connection between shipping infrastructure and the resilience of coastal communities at large. Inland transport infrastructure is also concentrated along the low-lying coast, and is highly vulnerable to climate shocks. The language of the proposed amendments to MARPOL Annex VI has the potential to support this. Improvements to port efficiency may also help offset the slightly increased costs of imports due to the mid-term measures.
Key revenue allocation areas for Vietnam
- Shipbuilding: funds could be used to upgrade Vietnam’s significant existing shipbuilding capacity, which is capable of outputting 2.6m Deadweight Tonnage (DWT) a year. A larger, more modern and greener domestic fleet would have the added benefit of reducing reliance on foreign lines, in particular when operating in the EU, which requires large expenditures in foreign currencies.
- Port upgrades: ports are not currently able to operate at full capacity due to labour shortage and underdeveloped facilities. Vietnam’s ports are also understaffed and suffer from a chronic lack of skilled labour, so there is a strong case for educational and training programmes under the banner of ensuring a just and equitable transition for seafarers.
- Hydrogen production: Vietnam plans to reach hydrogen production from currently negligible amounts to 10–20m tonnes per year by 2050. However, far more renewable capacity will be required to do this while attaining the goal of removing coal from the domestic energy mix in the same period.
- Infrastructure: further along the supply chain, investment into increasing the resilience of infrastructure will be needed, particularly in roads and electricity supply, which are highly vulnerable to flooding and storm damage at present.
