The IMO Net Zero Framework and the Challenges of Fragmentation in Decarbonising Global Shipping

In October, the International Maritime Organization (IMO) attempted to adopt the Net Zero Framework (NZF), a global regulatory framework for the decarbonisation of the shipping industry, but this did not occur, leading to a one-year delay for the framework. The NZF was approved at an April meeting of the Marine Environment Protection Committee (MEPC), the IMO body responsible for addressing the impact of shipping on the marine environment. The October meeting of the MEPC was supposed to be the second stage of the IMO’s decision-making process, where the NZF was to be adopted, thereby entering into force on 1 March 2027, making 2028 the first full year of compliance. Those dates are now delayed by at least one year, even though work continues in the development of the NZF. The postponement of the global framework for decarbonising shipping has given rise to significant concerns that regional and national frameworks will proliferate, creating a fragmented system and imposing substantial burdens on shipowners.

Global and Regional Action for Decarbonising Shipping

The IMO’s vision for decarbonising shipping is based on a straightforward premise – a global industry needs a single global regulatory framework to ensure a holistic response to climate change applicable to the majority of international shipping. At the October MEPC meeting, the IMO Secretary General made clear that the absence of a global system for the decarbonisation of shipping “will incite a proliferation of regional and national climate measures leading to inefficiency and a myriad of emissions pricing schemes”, increasing costs and uncertainty.

With the delay in adopting the NZF, there are now widespread concerns about regional organisations, such as the EU or individual states, enforcing their own carbon pricing systems for shipping. The EU system is already in place through the Emissions Trading Scheme (EU ETS) and FuelEU Maritime. The EU ETS has applied to shipping since 2024, with a phased schedule for compliance and payments, with 2025 being the first year of substantial payments. Djibouti and Gabon have carbon pricing mechanisms applying to ships calling into their ports, and work is being done through the African Sovereign Carbon Registry Foundation to develop a regional mechanism. The UK is extending its emissions trading system to shipping in July 2026, and a variety of other countries are also contemplating similar measures.

In many areas of international law and organisation, when a universal/global body is unable to fully agree or work out the necessary details in creating new legal frameworks, regional arrangements can move forward, as typically the smaller group is able to agree on the details. In the early years of the United Nations, states struggled to agree on a legal framework for the protection of human rights beyond the Universal Declaration of Human Rights. In Europe and the Western Hemisphere, regional bodies were able to create treaties and institutions to advance the promotion and protection of human rights. In terms of trade, regional bodies have been able to implement more detailed systems, as shown by the EU or ASEAN.

In these situations, if the regional approach operates in line with the objectives being pursued at the universal level, then it should not be seen as disrupting the international system. In fact, the differences in approaches brought by regional arrangements should be encouraged as they represent the diversity of the world. Regional approaches enable more tailored responses to global problems that reflect the needs and desires of distinct groups and support systems designed and operated by those directly affected. During the UN period, regional arrangements have proliferated across a range of subject areas and have effectively supported global developments.

Comprehensive, not Fragmented Approaches for Addressing Climate Change

However, it is not merely a stark choice between regional/national or global approaches. Ideally, the regional and global will complement each other and help to facilitate the pursuit of common objectives. Depending on the subject area, the global or the regional may offer more effective pathways for action. A global approach to climate change is essential, as it is an inherently transboundary issue in which greenhouse gas emissions from one part of the world affect the entire planet, effectively treating the globe and the atmosphere as a shared "global commons." Regional or national actions alone are insufficient to mitigate the collective risks posed by climate change. Effective governance in this area requires international cooperation to establish shared standards, pool financial and technological resources, and uphold principles of equity and shared responsibility, as outlined in the UNFCCC and the Paris Agreement.

The same applies to the decarbonisation of shipping, where a global approach is the most practical and effective given the nature of worldwide transportation and the impact of greenhouse gas emissions. Taking a global approach in addressing the climate impact of shipping will be the most effective for ensuring common standards are widely applied. Additionally, negotiations through the IMO ensure that all states can participate in developing the decarbonisation framework, thereby facilitating a more just transition to clean energy. A regional body like the EU may claim to support a just transition globally by helping the most vulnerable, but such measures will primarily rely on development aid and cannot support the entire world. In its current form, the EU ETS will use the revenue raised to support the EU’s decarbonisation infrastructure, and it will not be used to support broader global developments in the maritime industry.

The IMO NZF strives for a comprehensive approach to the decarbonisation of shipping in a way that individual regional or national approaches cannot achieve. The funds that will be collected under the NZF will be used to

• Reward low-emissions ship operations;
• Support innovation, research, infrastructure and just transition initiatives in developing countries;
• Fund training, technology transfer and capacity building to support the 2023 IMO Strategy on Reduction of GHG Emissions from Ships;
• Mitigate negative impacts on vulnerable States, such as Small Island Developing States and Least Developed Countries, including matters of food security.

Overall, the NZF provides for a more equitable approach through a single global market-based system. Not only does a global approach provide a more level playing field with reduced administrative burdens, but it also creates a system to minimise carbon leakage and market distortions, and provide more certainty for industry. The key issue in pursuing the decarbonisation agenda through the IMO and NZF is the need to balance the shipping industry's environmental imperatives with social and economic equity considerations, particularly for countries most vulnerable to climate change and with limited capacity to adapt.

With such a comprehensive approach at the global level, agreement on the details will be difficult. Regional approaches are often easier to implement due to the limited number of states involved and a narrower range of interests, as demonstrated by the EU. The NZF is, by design, a complex framework. It covers a wide range of technical measures concerning a global fuel standard based on life cycle assessment methodologies, along with a system for monitoring, reporting, and verification. Then, the economic measures have multi-level compliance targets along with rewards for the use of zero-to-near-zero-carbon fuels. Although this framework was agreed upon in early 2025, the absence of further details allows uncertainties to accumulate. In particular, as the allocation of funds raised through compliance fees has not yet been fully agreed upon and with a wide range of stakeholders seeking to benefit from the collected funds, finalising the details is essential for reaching an agreement.

And in today’s world, there is no discussion about climate change without politics coming into the debate. This is the primary reason the NZF has been delayed. The technical, combined with the economic measures, is already a complex mix of positions that requires an extensive understanding of diverse perspectives. When just transition considerations are introduced, the matter quickly escalates, with differing views on how to proceed. Finally, with the geopolitics of climate change, which are becoming more and more contentious, disagreement is inevitable. The IMO has faced disagreement among member states regarding measures to address climate change from the start. But the organisation has been able to use its practices and procedures to paper over diverging views and move things forward, even if concrete details have been lacking. At this stage, however, the stakes and consequences are high as talk about action is now moving to implementation. The elaboration of the NZF's details is not merely a technical issue specific to shipping. The details involve an extensive array of global governance issues, which means differing political positions will be prominent. It is not just a question of coming up with a range of technical numbers to satisfy the broad majority, the NZF seeks to be a global legal, technical, and political framework to address the climate impact of shipping.

Conclusion

The looming question for the next year is what will happen if the NZF is severely delayed or never adopted. Various IMO committees continue to work on decarbonisation measures, and the IMO Secretary General has remarked that the organisation’s 2023 decarbonisation strategy remains in place. Furthermore, it appears action at the global level in support of maritime decarbonisation continues to move forward. Investments in carbon-free energy, generally, and for shipping, including efficiency measures, continue to grow substantially.

Regional and national measures for decarbonising shipping are not out of place or wholly problematic in these circumstances. Many of the measures, including the EU’s systems, are explicitly framed as transitional tools to “push” the sector towards decarbonisation while global standards are being negotiated. Therefore, developments at the regional level will continue to evolve while the IMO pursues agreement. This may not provide maximal clarity for the industry, but it is a process that should be managed as decarbonisation efforts in shipping continue.