The global shipping industry is on the brink of adopting its first-ever worldwide carbon pricing system, as governments convene in London this week for a critical meeting of the International Maritime Organization (IMO). If approved, the IMO’s Net Zero Framework (NZF) would represent the first global climate pricing scheme for any internationally regulated sector.
The Extraordinary Session of the Marine Environment Protection Committee (MEPC ES.2), held from 14 to 17 October, is expected to finalise the adoption of the NZF, an ambitious package of amendments to MARPOL Annex VI that will make greenhouse gas (GHG) emissions pricing mandatory across the world fleet.
A subsequent technical session later in October (ISWG-GHG-20) will discuss detailed design and implementation measures before the regulation’s planned entry into force in March 2027.
The NZF, approved in principle at MEPC 83 in April, comprises draft amendments to MARPOL Annex VI introducing two central measures: a global fuel standard and a global GHG emissions pricing mechanism. These measures will require ships to report their annual greenhouse gas fuel intensity (GFI) to the IMO, with performance thresholds tightening over time.
Operators exceeding their limits will need to purchase credits through the IMO Net Zero Fund, while those outperforming targets can bank or trade surplus units. Full compliance with zero or near-zero emission fuels will attract financial rewards.
Once operational, the system could generate revenues of up to $15 billion per year by 2030, with funds earmarked for investment in green fuels, capacity-building and the energy transition in developing states.
Although the NZF enjoys broad international support, divisions remain. At April’s vote, 63 countries backed the proposal, including China, Brazil, the EU, South Korea and India, while 16, led by Saudi Arabia, the UAE and Russia, opposed it. The United States has since been actively lobbying to block or amend the framework, warning of potential economic impacts. A further 25 states, including several Pacific Island nations, abstained in protest over the perceived weakness of the agreement’s ambition.
The World Shipping Council (WSC), the International Chamber of Shipping (ICS) and other global associations have described the NZF as a ‘carefully balanced’ framework that would provide long-sought regulatory certainty. More than 180 shipping companies, including Maersk, Hapag-Lloyd, MSC and Mitsui OSK Lines, have signed up through the Getting to Zero Coalition. They argue that global alignment will help avoid a costly patchwork of regional rules and accelerate investment in clean fuel production.
Others, including tanker operators such as Frontline, GasLog and Bahri, warn that the framework risks imposing ‘excessive financial burdens’ on operators of conventional tonnage and, by extension, on global trade. With voting conducted on a national basis, such concerns have fuelled intense lobbying efforts in many capitals in recent weeks.
Despite its imperfections, environmental groups view adoption as a crucial milestone. Delaine McCullough, president of the Clean Shipping Coalition, said the NZF ‘is far from perfect, lacking ambition and proper safeguards… but it is a vital step forward’ in moving shipping towards true zero-emission operations. Nishatabbas Rehmatulla of the UCL Energy Institute added that the clarity provided by adoption ‘should not be underestimated’, arguing it could unlock billions in early-stage investment in scalable zero-emission fuels.
If adopted as expected, the NZF will mark a historic breakthrough in international climate policy, one that could set a precedent for other global sectors. The outcome of this week’s London meeting will signal whether governments are prepared to translate climate ambition into binding multilateral regulation for one of the world’s most critical and challenging industries to decarbonise.
