IMO’s ”Net-Zero Framework” postponed following failed vote

At its 83rd session held in April 2025, the IMO’s Marine Environ­ment Protection Committee (MEPC) approved its new ”Net-Zero Framework”, which includes wide-reaching measures to accelerate the decarbonisation of international shipping. However, in a surprising turn of events at the extraordinary session held in October 2025, member states voted through a proposal to postpone adoption for 12 months rather than voting to adopt the Net-Zero Framework. The postponement creates uncertainty for the shipping industry and complicates the timeline for meeting the IMO’s goal for the shipping industry to achieve net-zero emissions by 2050.

Key elements of the ­proposed framework: reduction ­ ­trajectory and GFI levy

The proposed measures would have included technical requirements on greenhouse gas (GHG) fuel intensity – abbreviated ”GFI” – and a market-based pricing and reward mechanism. The concept of the proposed new framework is similar to the concept used in FuelEU Maritime, including both technical and economic elements.

The most significant element of the proposed framework was the proposal for mid-term measures that would have progressively reduced GHG emissions from ships with a set of tiered trajectories. The proposal specified that ships would have been required to reduce their fuel intensity by a base target of 4% by 2028 compared to 2008 levels, and that a reduction of 17% is necessary to achieve the direct compliance target the same year. This target was to ­increase over time, reaching a 30% reduction (base target) and a 43% reduction (direct compliance target) by 2035.

The proposed pricing mechanism would have comprised two tiers:

• To comply with the upper tier (base target), remedial units would have been purchased at USD 380 per ton of CO₂-equivalents for attained GFI values above the base target.
• To comply with the lower tier (direct compliance target), remedial units would have been purchased at USD 100 per ton of CO₂-equivalents for attained GFI values between the base target and the direct compliance target.
• Ships using zero or near-zero GHG technologies would have been eligible for financial rewards.

The remedial units would have been paid to the new IMO Net-Zero Fund, which was set to be established to collect and disburse these pricing contributions and revenues. The revenues would have been used to reward low-emission ships, support innovation and infrastructure in developing countries, fund training and technology transfer for the IMO GHG Strategy, and help mitigate impacts on vulnerable states.

The initial prices for both upper and lower tier remedial units was intended to be reviewed by 1 January 2028, setting the prices for reporting periods from 2031 onwards. This review follows a similar logic to the FuelEU Maritime regulation, as IMO aims to make it more attractive for shipowners to use compliant fuel rather than rely on purchasing remedial units.

Overcompliance and flexibility mechanisms

Ships that would have been able to attain a GFI value below the direct compliance ­target – thus being ”overcompliant” – would have earned surplus units, which could have been used in one of three ways:

1. Be transferred to another ship to balance that ship’s upper tier compliance deficit
2. Be banked for use in the following reporting periods
3. Be voluntarily cancelled as a mitigation contribution

Unlike the flexibility mechanisms under the FuelEU Maritime regulation, where a surplus unit does not expire, a surplus unit under the proposed IMO regulations would have had a validity of two calendar years before being cancelled as a miti­gation contribution as set out in ­alternative three above.

Vote to postpone discussions for one year

The framework required a two-thirds majority at the extraordinary session to be formally adopted. After Saudi Arabia called for a vote, member states voted 57–49 in favour of postponing discussions for 12 months. Major supporters of the ­delay included oil-exporting countries such as Russia, China, and the United States, and major flag states including Panama and Liberia. 21 countries, including Greece and Cyprus, abstained from the vote, while eight countries did not attend the session.

The failure to achieve the required majority appears to have stemmed from several concerns raised by member states. Concerns were raised about the economic impact of the pricing mechanism on developing nations and the adequacy of support measures for vulnerable states. Oil-producing nations expressed reservations about the framework’s implications for fossil fuel use in shipping. Additionally, questions arose regarding the interaction between the proposed IMO framework and existing or planned regional carbon pricing schemes like the EU ETS. In advance of the session, President Trump and his administration explicitly rejected the IMO measures and vowed to punish any nation that endorsed it – a stance underpinned by threats of trade reprisals and targeted sanctions aimed at deterring support. Senior U.S. officials even went as far as suggesting that American ports might be closed to ships from pro-framework countries.

Impact on the shipping industry

The one-year adjournment pushes any potential adoption to late 2026 at the earliest, with entry into force now unlikely before 2028 and implementation delayed until 2029 or later. This timeline makes it increasingly challenging to meet the IMO’s 2030 and 2035 emissions reduction targets established in the 2023 GHG Strategy.

With the global framework postponed, the consequence is a continued fragmented regulatory landscape where different regions continue to either develop their own carbon pricing systems or choose not to develop any regulatory framework at all. Instead of achieving actual emission reductions, this continued fragmentation may lead to carbon leakage where trade patterns are restructured. High-emission ships may potentially shift their operations away from Europe and other regulated areas to regions with less stringent rules, while energy-efficient and newer vessels concentrate their activities in areas with strict regulatory frameworks. Some operators may avoid paying any carbon costs by staying away from regions with stricter rules, while others face significant compliance burdens. 

From a commercial perspective, the uncertainty may affect investment decisions in alternative fuels and low-emission technologies. While some operators may proceed with planned investments based on long-term decarbonisation goals and regional requirements, others may adopt a more cautious approach pending clarity on the final form of the IMO framework.

Next steps

It remains uncertain whether the framework will be adopted in its current form or whether amendments will be necessary to secure the required two-thirds majority. Potential areas for revision may include the pricing levels, support mechanisms for developing countries, the scope of covered vessels, or the interaction with regional schemes.

The IMO Secretariat has indicated that work will continue on the ­technical ­elements of the framework and on ­efforts to build consensus amongst member states. However, the strong opposition demonstrated at the October 2025 vote suggests that significant efforts will be required to bridge the gap between ­supporting and opposing delegations.