International shipping accounts for about 3 percent of global greenhouse gas (GHG) emissions —more than 10 times the annual emissions from Ireland. The International Maritime Organization (IMO) — the United Nations agency regulating international shipping— is working on adopting a GHG pricing instrument to decarbonise international shipping. This instrument does not only represent a key component of the policy mix to decarbonize the sector, but could also raise significant revenues, opening up opportunities for new and additional climate finance. 

In a new article, Goran Dominioni analyses whether World Trade Organization (WTO) law can limit the implementation of an IMO GHG pricing instrument. The analysis indicates that the possibility of challenging domestic measures that implement or enforce the GHG pricing instrument is generally low, but depends on both the instrument design and the procedure used to adopt it.
 

A GHG pricing instrument adopted via a widely ratified international convention leaves little room for a challenge. In the last round of negotiations at the IMO, many member states indicated that the pricing mechanism could be adopted via an amendment of MARPOL Annex VI. If this path is followed, only countries that have not ratified this convention would be in a position to challenge domestic measures that implement or adopt the pricing mechanism. 

The grounds to challenge the IMO GHG pricing instrument are also very limited, and potential violations could be justified for public policy reasons. To this end, it is important that the GHG pricing mechanism is climate-ambitious and does not include exemptions for selected countries. Equity-related concerns are best addressed via carbon revenue use.