Policy Challenges in Shipping: Equity, Developing Nations, and Climate Justice

Explore policy challenges in shipping through equity, developing nations, and climate justice. Learn how IMO rules and global trade shape a just transition.

In July 2023, the International Maritime Organization (IMO) adopted a landmark update to its Greenhouse Gas Strategy, committing shipping to reach net-zero emissions by 2050. For many observers, this was a historic moment: the world’s most globalized industry, responsible for carrying over 80% of world trade, was finally aligning itself with climate science.

Yet beneath the celebrations, deep tensions simmered. Delegates from developing nations, particularly those in the Global South, argued that the transition risks imposing disproportionate costs on countries least responsible for historical emissions. Questions of equity, fairness, and climate justice dominated the negotiations.

Shipping’s policy challenges are not only technical or financial—they are fundamentally political and ethical. Who should bear the costs of decarbonization? How can climate rules be fair to both developed and developing nations? And what does “justice” mean in an industry where fuel, freight rates, and environmental impacts are distributed so unequally?

This article explores the policy challenges in shipping through the lenses of equity, developing nations, and climate justice. We will examine why these issues matter, recent developments, case studies, challenges and solutions, and the future outlook for a just transition in maritime transport.

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Why This Topic Matters in Maritime Operations

Shipping is global by nature. A single container vessel may load cargo in China, refuel in Singapore, transit the Suez Canal, unload in Rotterdam, and continue to West Africa. Climate rules affecting one region ripple across the entire network.

Shipping’s Role in Global Emissions

Maritime transport contributes around 3% of global GHG emissions, roughly equal to Germany’s entire carbon footprint. Without action, this share could rise to 5–8% by 2050 (IMO, 2023).

Unequal Responsibilities and Capabilities

  • Developed Nations: Historically responsible for most emissions and with stronger financial and technological capacity.

  • Developing Nations: Depend heavily on maritime trade for growth and are more vulnerable to climate impacts, yet lack resources for costly green transitions.

Climate Justice and the IMO

The principle of Common but Differentiated Responsibilities (CBDR) underpins many climate negotiations. But in shipping, this clashes with the IMO’s principle of “no more favorable treatment”, which requires equal standards for all flag states to avoid competitive distortions.

This tension—between fairness and uniformity—is the crux of the equity debate in shipping policy.

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Key Developments, Innovations, or Technologies

The IMO GHG Strategy (2023)

In July 2023, the International Maritime Organization (IMO) adopted a revised Greenhouse Gas (GHG) Strategy that marked a watershed moment for global shipping. For the first time, the industry committed to reaching net-zero emissions “by or around 2050”, with concrete interim checkpoints: a 20–30% reduction in GHG emissions by 2030, followed by 70–80% by 2040, compared to 2008 levels. These milestones set a clear trajectory for decarbonization, while leaving some flexibility in the final 2050 wording to accommodate political compromises.

The significance of this agreement cannot be overstated. Shipping, responsible for nearly 3% of global greenhouse gas emissions, now has a pathway aligned—albeit cautiously—with the Paris Agreement’s goals. Yet, as with all international negotiations, the fine print reflects a delicate balance between ambition and equity.

The Equity Debate

The negotiations revealed deep divisions between developed and developing nations. Small Island Developing States (SIDS) and Least Developed Countries (LDCs), already facing existential threats from rising sea levels and climate impacts, pushed hard for higher ambition and earlier targets. For them, shipping decarbonization is not just about climate responsibility but about survival. At the same time, they demanded stronger guarantees that the costs of the transition would not fall disproportionately on their fragile economies.

Developed nations and major shipping centers, while supportive of ambition, were more cautious about the economic implications of accelerated targets. This tension gave rise to a central theme of the IMO GHG Strategy: equity and fairness in implementation. The principle of “Common but Differentiated Responsibilities”, long a cornerstone of climate negotiations, is now embedded in shipping policy, shaping how financial resources and technical assistance are distributed.

Carbon Pricing Proposals

One of the most hotly debated tools under the IMO’s consideration is the introduction of Market-Based Measures (MBMs) to put a price on carbon. Several proposals are on the table, ranging from global emissions trading schemes to direct levies on fuel consumption.

Perhaps the most prominent is the joint proposal from the Marshall Islands and Solomon Islands, which advocates for a global carbon levy of $100 per tonne of CO₂ emitted. This measure would apply across the international fleet, creating a powerful financial incentive to adopt low- and zero-carbon fuels. Supporters argue that such a levy would not only drive technological adoption but also generate billions in revenue annually.

The equity dimension is crucial here. Under current proposals, a significant portion of the revenues raised through carbon pricing would be redistributed to fund green infrastructure and climate resilience projects in developing nations. This redistribution is seen as essential for ensuring that decarbonization does not deepen existing inequalities between advanced maritime hubs in Europe and Asia and underdeveloped port systems in Africa, Latin America, and the Pacific.

While consensus has not yet been reached on the exact design of a global MBM, the 2023 strategy explicitly recognizes that some form of carbon pricing will be required to meet the targets. The coming years are expected to see intense negotiations on its scope, rate, and revenue use.

Technology and Fuel Pathways

The IMO strategy also lays the foundation for the technological transition of the shipping sector. It explicitly identifies alternative fuels—such as LNG, methanol, ammonia, and hydrogen—as central pathways to decarbonization, alongside energy efficiency improvements.

LNG, though already widely adopted, is considered a transitional fuel given its carbon reductions but ongoing methane slip issues. Methanol has emerged as a practical near-term option, particularly with growing production of bio- and e-methanol. Ammonia is being promoted as a long-term zero-carbon candidate, while hydrogen and fuel cells are expected to play a growing role in short-sea and regional shipping.

Yet, the equity issue again looms large. Much of the bunkering and production infrastructure for these fuels is concentrated in Europe, East Asia, and North America, regions with the capital and regulatory push to invest early. Ports in Africa, Latin America, and many Pacific island nations risk being left behind, potentially excluded from future trade routes if they cannot provide alternative fuel bunkering. Addressing this uneven geography of fuel infrastructure has become one of the IMO’s most pressing policy challenges.

Finance and Capacity-Building

Recognizing these disparities, the IMO has emphasized finance, training, and capacity-building as pillars of its GHG Strategy. Its Integrated Technical Cooperation Programme (ITCP) is being scaled up to provide technical assistance, training programs, and advisory support to developing states that lack the expertise or infrastructure to adopt alternative fuels.

Meanwhile, international labor organizations have underlined the need for a “Just Transition” for seafarers. Both the International Transport Workers’ Federation (ITF) and the International Labour Organization (ILO) have warned that the shift to new fuels and technologies will fundamentally change onboard operations. Seafarers—particularly those from developing nations who make up a majority of the global maritime workforce—must receive retraining in fuel handling, digital energy management systems, and new safety protocols. Without this investment, the human element of the transition risks becoming a bottleneck.

A Global Transition at a Crossroads

The IMO GHG Strategy (2023) is both a roadmap and a reflection of the political compromises underpinning global maritime governance. It sets ambitious goals, acknowledges the urgency of climate action, and outlines tools—carbon pricing, alternative fuels, and technical assistance—that can deliver results. But it also leaves much to be decided: the exact form of carbon levies, the redistribution of revenues, and the pace at which infrastructure and skills will spread beyond developed regions.

What is clear is that the success of the strategy depends as much on equity and capacity-building as on technology and regulation. For the global South, meaningful participation will hinge on access to finance, training, and infrastructure investment. For the global North, credibility will depend on ensuring that ambition translates into real emission cuts without leaving vulnerable states behind.

In this way, the IMO’s 2023 GHG Strategy is not simply a technical document—it is a political blueprint for a just and inclusive maritime energy transition.

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Challenges and Practical Solutions

Challenge 1: Unequal Access to Green Fuels

  • Problem: Green fuels are concentrated in wealthy hubs, raising costs for developing nations.

  • Solution: Create green shipping corridors that include ports in developing regions, financed through carbon revenues.

Challenge 2: Disproportionate Economic Burden

  • Problem: Carbon pricing could increase freight rates for import-dependent nations.

  • Solution: Design equitable revenue redistribution mechanisms, ensuring funds flow to vulnerable economies.

Challenge 3: Workforce Transition

  • Problem: Many seafarers come from the Philippines, India, Indonesia, and African nations. Without training, they risk exclusion from future green jobs.

  • Solution: Expand IMO Model Courses and regional maritime academies with alternative fuel training modules.

Challenge 4: Policy Coherence

  • Problem: Tension between IMO global rules and unilateral regional measures (e.g., EU ETS).

  • Solution: Strengthen global alignment, with the IMO serving as the central authority while respecting regional initiatives.

Challenge 5: Trust and Representation

  • Problem: Developing nations often feel underrepresented in decision-making dominated by shipping giants and developed states.

  • Solution: Enhance inclusive governance structures, empowering SIDS, LDCs, and regional port organizations in negotiations.

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Case Studies / Real-World Applications

The Marshall Islands & Solomon Islands Carbon Levy Proposal

Despite being small emitters, these Pacific nations spearheaded a $100/ton CO₂ levy proposal, arguing that existential climate threats justify bold action. Their leadership reframed the debate around justice and survival.

EU ETS Expansion and Its Global Ripple Effects

The EU’s decision to include shipping in its ETS from 2024 created fears of market distortion, with African and Asian exporters warning of higher trade costs. The controversy highlights the risks of regional vs global policy fragmentation.

Green Corridors: Clydebank Declaration

The 2021 Clydebank Declaration launched green shipping corridors, but most announced routes are between developed countries. Including ports in Africa, South Asia, and Latin America remains a challenge for true equity.

Seafarer Training in the Philippines

The Philippines, supplying over one-quarter of the world’s seafarers, has begun adapting training centers for alternative fuel operations. This highlights both opportunities and the need for global investment in skills.

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Future Outlook & Trends

  1. Carbon Pricing with Equity Mechanisms
    By 2030, a global IMO carbon levy is likely. Key will be ensuring revenues fund climate adaptation and decarbonization in developing nations.

  2. Inclusive Green Corridors
    Future green corridors must integrate ports from the Global South to avoid creating a two-tier maritime system.

  3. Seafarer Just Transition
    Expect stronger collaboration between IMO, ILO, and ITF to safeguard workforce equity.

  4. Regional vs Global Tensions
    The clash between EU ETS and IMO global measures will shape future governance. The trend is toward hybrid systems where regional measures complement global ones.

  5. Climate Justice as a Core Principle
    Equity will no longer be a side debate—it will become central to maritime climate governance.

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Frequently Asked Questions (FAQ)

1. What does climate justice mean in shipping?
It means ensuring that the costs and benefits of maritime decarbonization are fairly distributed, especially for vulnerable developing nations.

2. How does the IMO balance fairness and uniform rules?
Through global negotiations that attempt to combine the principle of no more favorable treatment with financial support for weaker states.

3. Why are developing nations concerned about carbon pricing?
Because higher freight costs could hurt their exports and increase import prices for essential goods.

4. What role do seafarers play in equity?
Most seafarers come from developing countries. Their training and protection are central to a just transition.

5. How can carbon revenues be used fairly?
By channeling funds into green infrastructure, training, and adaptation projects in developing regions.

6. Is the EU ETS unfair to developing nations?
Some argue yes, as it increases costs for exporters to Europe. Others see it as a necessary step to push IMO toward global action.

7. Will developing nations benefit from green shipping?
Yes, if policies ensure they access financing, technology, and training rather than being left behind.

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Conclusion

The story of climate policy in shipping is not just about fuel technologies or efficiency measures—it is about fairness, justice, and survival. Developing nations, often the most vulnerable to climate impacts, are demanding that the transition be equitable.

The maritime industry must embrace a just transition, where climate ambition is matched by financial support, inclusive governance, and training for the global workforce. Without equity, shipping risks reinforcing existing inequalities. With it, the sector can become a model of how global industries deliver not only on climate goals but also on justice.

The path forward requires bold policy, shared responsibility, and above all, recognition that in the face of rising seas and shifting trade, no nation can be left behind.

References

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