IMO Seeks Net-Zero Framework Compromise as GHG Fuel Standards Gain Support

International Maritime Organization member states are working towards a compromise on the delayed Net-Zero Framework, with growing agreement around mandatory reductions in the greenhouse gas intensity of marine energy but continued uncertainty over the framework’s financial measures. The regulations were due for adoption in 2025 before governments agreed to delay the process by a year following opposition from the United States and major oil-producing countries.

The framework is intended to establish a global system for reducing shipping emissions rather than leaving countries and regions to develop separate rules. Its two central components are a technical standard requiring ships to progressively reduce the lifecycle GHG intensity of the energy they use and an economic mechanism that would impose costs when ships exceed those thresholds.

 

Technical GHG Standards Are Gaining Wider Support

 

The strongest area of convergence is now around the technical requirements. IMO officials say member states broadly accept the need for standards governing the greenhouse gas intensity of marine fuels, providing a common trajectory for reducing emissions from international shipping.

"We are clear that we need technical measures ... on that, the IMO member states are clear and are on board," said Dorota Lost-Sieminska, Director of the IMO's Legal Affairs and External Relations Division. The more difficult question remains how strongly financial mechanisms should be incorporated into the final framework.

 

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Carbon Pricing Remains the Main Point of Disagreement

 

The proposed economic measures would place financial costs on shipping emissions that exceed the framework's GHG-intensity thresholds. The United States has opposed the Net-Zero Framework in its current form, viewing its mandatory financial components as a form of carbon taxation, while continuing to participate in negotiations over possible revisions.

The economics of alternative fuels remain central to the debate. S&P Global data cited in the report showed delivered very-low-sulfur fuel oil in Singapore costing $20.15 per gigajoule in August, compared with $48.54/GJ for fully sustainable methanol. Supporters of stronger carbon pricing argue that some form of economic mechanism is needed to narrow such cost gaps and encourage wider adoption of lower-emission marine fuels.

 

Shipping Companies Want a Global Rulebook

 

The debate is also about regulatory fragmentation. If governments cannot agree on a global IMO framework, shipping companies could face an expanding mix of national and regional emissions regimes, increasing compliance complexity for vessels operating internationally.

"Member states are still negotiating," Lost-Sieminska said. "We would like to avoid regional solutions and fragmentation and there is a need to have a global solution." Karrie Trauth, President of the UK Chamber of Shipping, also argued that shipowners would prefer an imperfect global compromise to multiple regional systems.

 

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Fuel Transition Depends on Both Regulation and Technology

 

The negotiations reflect a broader challenge for shipping decarbonisation. Shipowners need to invest in vessels and fuel systems that can remain in service for decades, while the future availability and price of alternatives such as methanol, ammonia and other lower-carbon fuels remain uncertain.

The technical part of the IMO framework could provide clearer long-term signals about how quickly fuel emissions intensity must decline. But without agreement on the financial mechanism, the gap between conventional bunker fuels and more expensive sustainable alternatives could continue to slow investment.

 

The Final Compromise Will Determine the Strength of the Framework

 

The negotiations increasingly appear to be separating into two questions: whether global marine fuel standards are needed, where support is strengthening, and how far the IMO should go in attaching mandatory financial costs to emissions.

The eventual compromise will determine whether the Net-Zero Framework operates mainly as a fuel-intensity standard or combines those standards with a stronger economic incentive for switching fuels. For an industry built around global trade routes, maintaining one international system rather than a patchwork of regional rules remains a central consideration.

 

Source: S&P Global