In mid-October, the International Maritime Organization (IMO) will convene an extraordinary session of the Marine Environment Protection Committee (MEPC) with the purpose of deciding on the adoption of the IMO Net Zero Framework (NZF), a regulatory package that would reshape how greenhouse gas emissions from international shipping are governed.
This vote does not take place in a political vacuum. The Trump Administration has already signalled strong opposition, threatening trade retaliation against IMO member states supporting the NZF. Various other international actors including the EU continue to push in favour, framing the NZF as the only viable pathway to avoid regulatory fragmentation. Against this backdrop, two scenarios present themselves each carrying profound consequences for the future of maritime decarbonisation. Today’s newsletter takes a closer look at the two potential outcomes and how they may influence the shipping industry going forward.
The IMO Net Zero Framework
The IMO Net Zero Framework is being proposed as an amendment to MARPOL Annex VI. It introduces a GHG fuel intensity standard, with ships over 5,000 GT required to progressively reduce the GHG intensity measured in grams CO₂e per MJ. There are dual-tier targets: a “Base Target” (less demanding) and a “Direct Compliance Target” (stricter). Failure to meet them leads to requirements to purchase Remedial Units (RUs), priced under different tiers (100 and 380 USD/t CO₂e), with higher cost for more serious non-compliance. The first reporting year is 2028, and reduction trajectories to 2035 suggest significant tightening of expectations. Further, the NZF includes a system for trading and banking surplus units (SUs) somewhat similar to the current FuelEU Maritime Regulation. Please also see our previous newsletter covering the regulation’s impact on fuel costs.
Scenario 1: IMO Net Zero Framework is Adopted
Should the IMO adopt the framework in October, international shipping would face a global baseline for GHG regulation in shipping. Among the consequences:
• Realignment of EU regulatory regimes: EU ETS and FuelEU Maritime are likely to adjust. While EU ETS will potentially remain, FuelEU Maritime may not. In a coexistence scenario, FuelEU might adapt its GHG intensity thresholds, emission factors, methodology, and certification rules to avoid inconsistencies between the different regulations.
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• Cost pressure on fuel types: Fossil fuels will incur high compliance costs. Fuels that currently benefit under FuelEU (like LNG or even some bio-blends) may be penalised under IMO's dual-tier structure. Even for 2028 the cost increase for HFO could be several hundred USD per tonne; for 2030 and beyond it becomes even more severe.
• Global standard: Adoption would also strengthen the case for global fuel certification standards and a harmonised approach to carbon accounting, reducing the risk of trade distortions. A global standard to report emissions with an overarching methodology and corresponding emission factors.
The political significance should not be underestimated: an adopted NZF would mark the first time shipping's decarbonisation was governed through a binding global framework rather than regional patchwork.
Scenario 2: Rejection of the IMO Net Zero Framework
If the NZF fails to secure majority support, the regulatory landscape risks becoming increasingly fragmented. In such a case, the EU may extend FuelEU Maritime to cover 100% of international voyages touching EU ports, rather than the current 50% split. The UK is preparing its own maritime ETS, Turkey is considering similar steps, and countries such as Gabon and Djibouti are introducing carbon pricing for shipping.
• Divergent methodologies proliferate: Without global standardisation, each jurisdiction may define its baseline emission factors, use different accounting (WtW, TtW), set different definitions of compliance, penalties, and surpluses. This could lead to arbitrage, regulatory burden, and huge technical and legal complexity for shipping companies.
• Fuel cost disparity becomes harder to manage: Fuels rewarded in one regulation may be penalised in another. Moderate bio-blends or LNG may be accepted in one region but not in another. Uncertainty over fuel choices and corresponding investment risks will increase.
In short, rejection of the NZF risks unleashing a regulatory race where shipping companies must navigate a maze of regionally defined obligations and methodologies rather than a single international standard.
Reflection on the Scenarios
Both scenarios carry significant implications. Adoption of the NZF promises greater global consistency and a clearer regulatory path for low-carbon and sustainable fuel transition. Rejection risks a fragmented regulatory environment with overlapping, inconsistent mandates, greater complexity, and less predictability.
The true outcome remains uncertain. What is clear, however, is that the choice made at IMO will reverberate across EU ETS, FuelEU Maritime, national schemes, fuel markets, and emissions accounting. While we do not claim to know what will happen, you can rest assured that we will continue helping you navigate the future of maritime decarbonisation regulations no matter what.
BetterSea’s FuelEU Maritime Platform helps you find the best compliance pathway considering all complexities of maritime decarbonisation regulations. Also check out our FuelEU Pooling Marketplace for effortless and fast compliance. It provides you with a streamlined, end-to-end process covering all potential compliance options, including external pooling and surplus trading.
Source: The BetterSea