Aftermath of IMO’s net-zero framework: ‘Historic’ agreement or ‘total shipwreck’?

With the global climate regulation agreement adopted by the International Maritime Organization (IMO) at the 83rd session of the Marine Environment Protection Committee (MEPC 83), shipping is on track to become the first industry with internationally mandated targets to reduce emissions. While some industry representatives praise the agreement as “historic”, others describe it as a “shipwreck” that missed targets. However, a unified opinion is that more work is needed to steer the shipping industry toward a climate-neutral path.

During the session held from April 7 to April 11, MEPC 83 approved the IMO Net-Zero Framework, said to be the first in the world to combine mandatory emissions limits and greenhouse gas (GHG) pricing across an entire industry sector.

Specifically, the approved measures include a new fuel standard for ships and a global pricing mechanism for emissions. These measures are set to be formally adopted in October 2025 and enter into force in 2027.

Once adopted, they will become mandatory for large ocean-going ships over 5,000 gross tonnage, which emit 85% of the total CO2 emissions from international shipping.

As explained, the draft regulations will require ships to comply with: 

• Global fuel standard: Ships must reduce, over time, their annual greenhouse gas fuel intensity (GFI) – that is, how much GHG is emitted for each unit of energy used, which is calculated using a well-to-wake approach.  
• Global economic measure: Ships emitting above GFI thresholds will have to acquire remedial units to balance their deficit emissions, while those using zero or near-zero GHG technologies will be eligible for financial rewards.  

IMO elaborated that there will be two levels of compliance with GFI targets: a Base Target and a Direct Compliance Target at which ships would be eligible to earn “surplus units”.  Ships that emit above the set thresholds can balance their emissions deficit by transferring surplus units from other ships;  using surplus units they have already banked; or using remedial units acquired through contributions to the IMO Net-Zero Fund, which will be established to collect pricing contributions from emissions.

The revenues from the fund will then be disbursed to mitigate negative impacts on vulnerable states, such as Small Island Developing States and Least Developed Countries; reward low-emission ships;  support innovation, research, infrastructure and just transition initiatives in developing countries;  and fund training, technology transfer and capacity building to support the IMO GHG Strategy.

Closing the MEPC 83 meeting, IMO Secretary-General, Arsenio Dominguez, commented: “The approval of draft amendments to MARPOL Annex VI mandating the IMO net-zero framework represents another significant step in our collective efforts to combat climate change, to modernize shipping and demonstrates that IMO delivers on its commitments.  

“Now, it is important to continue working together, engaging in dialogue and listening to one another, if we are to create the conditions for successful adoption.”  

The adoption of the IMO Net-Zero Framework has sparked polarized opinions among shipping industry representatives and associations, with reactions still pouring in.

The World Shipping Council said this “unprecedented global agreement” at the IMO marks “a critical next step” toward shipping decarbonization.

“This is a major milestone for climate policy and a turning point for shipping. Our industry has long been labelled as ‘hard to abate,’ but record industry investment and a new global measure can turn the tide on that,” World Shipping Council President & CEO, Joe Kramek, commented.

The global climate agreement was also welcomed by European Shipowners | ECSA and its Secretary General, Sotiris Raptis, who stated: “Shipping will be the first sector to have a globally agreed carbon price. It is key that multilateral cooperation at UN level delivers concrete action in times of increasing uncertainty, to achieve the 2050 net zero emissions target.  Even though the agreement is not perfect, it is a good starting point for further work. It is a framework which we can build upon to ensure the necessary investment in the production of clean fuels.”

Furthermore, Danish Shipping expressed enthusiasm over this “historic agreement” but also noted that “something more ambitious” would be favorable.

Meanwhile, Pacific leaders and negotiators expressed their “deep disappointment” in the outcome of the MEPC 83 and abstained in the final negotiations, “refusing to support an agreement that would do too little, too late to cut shipping emissions and protect their islands”.

Specifically, ministers from the Republic of Fiji, the Republic of the Marshall Islands, the Republic of Seychelles, Solomon Islands, Tuvalu, and the Republic of Vanuatu, as well as a representative of the Republic of Palau, decided to abstain on the final deal.

Manasseh Maelanga, Solomon Islands’ Minister of Infrastructure Development, explained this decision: “We cannot support an outcome that does not live up to the agreed strategy.  We will seek to improve this deal that unchanged will cause greater instability, and force shipping to continue polluting – that we can not accept.” 

Simon Kofe, Minister for Transport, Energy, Communication and Innovation, agreed: “We came as climate vulnerable countries—with the greatest need and the clearest solution. And what did we face? Weak alternatives from the world’s biggest economies—alternatives that won’t get us on a pathway to the 1.5°C temperature limit. They asked us to settle for less, while we are the ones losing the most. We will not negotiate away our future.”

Ralph Regenvanu, Minister of Climate Change Adaptation, Meteorology, Geo-Hazards, Environment, Energy, and Disaster Management of Vanuatu placed blame on a range of parties, including Saudi Arabia, the U.S., and other “fossil fuel allies” that “abandoned 1.5°C” and “pushed down the numbers to an untenable level and blocked progress at every turn”. 

The Clean Shipping Coalition, an international association of civil society environmental protection organizations,  critized IMO member states for falling far short of the UN body’s own 2030, 2040 and 2050 climate targets and “failing the people and regions most vulnerable to climate change”.

John Maggs, Clean Shipping Coalition’s Representative at IMO, called the agreement reached on revision of the IMO’s Carbon Intensity Indicator “a total shipwreck”, and Faïg Abbasov from Transport & Environment warned that the IMO deal will create the biggest push to “the forest-destroying first generation biofuels” for the next decade.

Other organizations, including Global Maritime Forum, stated that the adopted emission targets will need to be improved to accelerate the adoption of future fuels and incentivize investments in their production.

The unified opinion sees the adopted measures may not be strong enough on their own to deliver on the IMO’s strategy and incentivize the rapid development of e-fuels such as e-ammonia or e-methanol, which will be needed in the long run due to their scalability and emission reduction potential

A failure to begin investing in these fuels now would put the target of at least 5% zero- and near-zero emission fuel use by 2030 and the industry’s entire 2050 net-zero goal at risk, GMF said.

Green Hydrogen Organisation CEO, Jonas Moberg, remarked: “The IMO’s decision today sends an important signal to green fuels producers to go forward with their projects. The compromise reached fails to place a universal levy on shipping emissions which means technologies like LNG will persist for longer than necessary, but it is now clear that near zero emissions fuels like green ammonia will play an ever larger role in shipping.

“The work is not over with much detail on emissions calculation methods and how near-zero emissions fuels will be rewarded needed before and after formal adoption of these measures in October to ensure a level playing field for green fuels.” 

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