IMO Net-Zero Framework: opportunities for ambitious action

Background: The IMO Net-Zero Framework

The ‘IMO Net-Zero Framework’ was approved at the 83rd meeting of the Marine Environment Protection Committee (MEPC 83) in April 2025. It is intended to become a legally binding framework to reduce GHG emissions from ships globally. The framework combines technical and economic elements under a ‘two-tiered global fuel standard (GFS)’. It sets binding emissions intensity reduction targets for ships, requiring penalty payments for those who fail to meet them.

Although it represents a significant achievement, the IMO Net-Zero Framework in its current form does not incentivise the ambitious emissions reductions needed to meet the commitments of the 2023 IMO GHG Strategy (the 2023 Strategy), nor raise the funds necessary to ensure a just and equitable transition, amongst other shortcomings.

Key areas for further ambition

There are still several opportunities for high ambition action to influence the further development of the IMO Net-Zero Framework in a manner that prioritises ambitious emissions reductions and a just and equitable transition.

1. GHG fuel intensity reduction factors:

The Net-Zero Framework requires ships to keep their GHG Fuel Intensity (GFI) under increasingly stringent annual targets. However, the current GFI reduction factors, set until 2035, do not effectively incentivise ships to reduce their emissions in line with the IMO 2023 Strategy’s targets. Stronger targets would better incentivise ships to transition to zero and near-zero fuels and technology (ZNZs).

2. Generation and distribution of revenue:

The Framework is set to generate $10-15bn per year in revenues, far less than the annual $40-60bn that could have been raised under a flat rate universal levy, or what is needed to both ensure a just and equitable transition and develop ZNZs. Setting a higher price on penalties for emissions when the next set of figures will be determined by January 2028, alongside more stringent GFI reduction factors, would generate more ambitious revenues.

3. Regulations and guidelines on ZNZs:

To ensure the early uptake of ZNZ technologies, fuels and/or energy sources, the ZNZ reward guidelines should provide clear regulatory certainty and confidence to investors, producers and shipowners.

The Guidelines for calculating fuels’ lifecycle GHG emissions (also known as the LCA Guidelines), set to be finalised in 2026, currently have no safeguards against biofuels. The guidelines should include indirect impacts on land use change (ILUC) to avoid emissions ensure stronger support for the uptake of truly sustainable solutions.

4. Vessel size:

The Framework only applies to ships over 5,000 GT, but vessels between 400 – 5,000 GT are responsible for a significant proportion of shipping emissions. The periodic review poses an opportunity to extend the Framework’s scope to smaller vessels and better incentivise the maritime transition.

What are the next steps for States?

Governments have a unique opportunity to strengthen the Framework before and after it enters into force in 2027, by developing a robust and strong set of guidelines on these critical policy details.

Although the measures have been approved, the opportunity for ambition is far from over. Now more than ever, States must champion greater ambition while most importantly amplifying the voices of those most impacted by climate change, ensuring no one is left behind.

Read the policy briefing. 

What is the IMO Net-Zero Framework?

The IMO Net-Zero Framework is a draft international regulation designed to reduce greenhouse gas (GHG) emissions from the global shipping industry. Its main emissions reduction tool is a two-tier global fuel standard (GFS) that includes partial emissions pricing and rewards for ships using cleaner fuels or technologies (called ZNZs – zero or near-zero emission sources).

A dedicated IMO Net-Zero Fund will collect revenues from emissions pricing and redistribute them for ZNZ rewards and to support a just and equitable energy transition.

For a more detailed breakdown, read our in-depth guide to the IMO Net-Zero Framework.

Background and timeline

The Framework was approved in April 2025 at the 83rd meeting of the IMO’s Marine Environment Protection Committee (MEPC 83).

If it passes the legislative amendment process, it will be added as a new Chapter 5 of MARPOL Annex VI, making it legally binding for the countries who have ratified MARPOL Annex VI. Find out more in our guide: What’s the procedure for amending MARPOL Annex V?

After formal adoption and ratification, the regulation will:

• Enter into force in 2027
• Begin operation in 2028
  
  

Who and what does the Framework apply to?

The IMO Net-Zero Framework:

• Applies to ships of 5,000 gross tonnage and above involved in international voyages.
• Excludes domestic-only ships, military vessels, and other specified categories.
• Is enforced by port states – any ship calling at a port in a MARPOL Annex VI country must comply.
• Puts obligations on shipowners/operators to reduce their ships’ emissions intensity.
  
  

How the IMO Net-Zero Framework works

1. GHG Fuel Intensity (GFI) Targets

Every year, ships must calculate their GHG Fuel Intensity (GFI) – the GHG emissions per unit of energy used.

Ships are given two annual GFI targets:

• Base Target – lower standard.
• Direct Compliance Target – stricter standard.

Targets become more ambitious over time, currently specified up to 2035 (see table below). Future targets will be set every five years.

2. Emissions pricing – the two tiers

There are two ‘tiers’ that ships’ emissions can fall into, based on how intense they are.

Tier 1: Emissions between the base and compliance target.
→ Priced at $100/tonne CO₂eq.

Tier 2: Emissions above the base target.
→ Priced at $380/tonne CO₂eq.

The pricing for both tiers is calculated on a well-to-wake basis, where the total emissions of a ship’s entire fuel lifecycle (from production to use on board) is accounted for.

3. Compliance options

All ships will be monitored for compliance and will then be expected to take the following action:

• Compliant ships: Those whose total emissions intensity is below the direct compliance target (i.e. the least emissions intensive ships) may earn surplus units (credits) which:
  • Are valid for two years.
  • Can be sold once, used by the credited ship later, or cancelled voluntarily.

• Non-compliant ships: Must either:

• • Buy remedial units (based on excess emissions) from a central registry.
  • Use stored surplus units or buy them from compliant ships, but only for Tier 2 compliance.

All transactions and emissions data will be tracked through the IMO GFI Registry.

Key challenges and concerns

In brief, the three key concerns for the implementation of the IMO Net-Zero Framework are that:

1. It will not reduce emissions quickly enough or in line with previously agreed targets.

The IMO’s 2023 GHG Strategy aims for:

• 20-30% emission reductions by 2030.
• 70-80% by 2040.
• Net-zero around 2050.

However, current analysis from Transport & Environment suggests the Net-Zero Framework may only achieve 8-10% reductions by 2030, falling short of targets and not aligned with the 1.5°C Paris Agreement pathway.

2. There is a very limited pot of potential revenue, estimated at $10-15bn a year (nowhere near what is needed to ensure a just and equitable transition).

3. Its implementation could have highly inequitable outcomes. In particular, the trading of surplus units between ships favours well-resourced operators in wealthy countries.

Read more about the main shortcomings in the IMO Net-Zero Framework.

Is an ambitious and equitable outcome possible?

The IMO Net-Zero Framework marks a significant step forward in regulating international shipping’s emissions, introducing a global measure and acknowledging the need for climate justice.

However, without stronger targets, broader coverage, and clarity on use of funds, it may not meet the climate ambition, nor the just and equitable transition that many countries and organisations have been calling for.

For a more ambitious and equitable outcome, future negotiations must:

• Strengthen emission intensity reduction targets.
• Guarantee equitable access and significant revenue distribution to climate vulnerable states.
• Provide early support for true ZNZ solutions, such as hydrogen derived e-fuels and wind propulsion.

For more information, read our in-depth guide to the IMO Net-Zero Framework