IMO Net-Zero Framework: Establishes Mandatory Marine Fuel Standards, GHG Pricing and Value Chain Decarbonisation Governance Across International Shipping

What’s Required

The IMO Net-zero Framework creates a sector-wide regulatory architecture for reducing greenhouse gas emissions from international shipping. Unlike voluntary corporate climate programmes, this is designed as a legally binding amendment to MARPOL Annex VI, applying through flag states and port state enforcement once adopted and in force.

The architecture integrates:

• Mandatory GHG Fuel Intensity requirements.

• Economic compliance mechanism / GHG pricing.

• Compliance balance system.

• Surplus units and remedial units.

• IMO Net-zero Fund.

• Well-to-wake fuel lifecycle accounting.

• Reporting and verification obligations.

• Enforcement through MARPOL Annex VI parties.

This creates a global maritime emissions governance model, where fuel choice, ship efficiency, and operational performance are converted into measurable compliance obligations.

The IMO describes the framework as the first in the world to combine mandatory emissions limits and GHG pricing across an entire industry sector. It was approved by MEPC 83 in April 2025, but formal adoption was later delayed, with discussions adjourned until 2026.

1. Emissions Disclosure, Measurement, and Reduction

Shipowners, operators, and responsible entities will be required or expected to:

• Measure greenhouse gas emissions from ships.

• Calculate GHG Fuel Intensity on a well-to-wake basis.

• Report fuel consumption and energy use.
  Track lifecycle emissions of marine fuels.

• Reduce emissions intensity over time.

• Acquire or use compliance units where targets are missed.

• Generate surplus units where performance exceeds requirements.

For covered ships, this includes:

• Annual reporting through the IMO Data Collection System processes.

• Verification of fuel consumption and emissions data.

• Compliance with GHG Fuel Intensity thresholds.

• Financial exposure where emissions exceed permitted limits.

• Use of eligible zero or near-zero GHG fuels.

This establishes a ship-level emissions disclosure and compliance model, where operational data becomes a regulatory obligation rather than a voluntary ESG metric.

The proposed framework applies to ships over 5,000 GT engaged in international trade and combines GHG fuel-intensity requirements with pricing and reward mechanisms.

2. Scope 3 Governance and Value Chain Integration

The IMO Net-zero Framework directly affects corporate Scope 3 emissions because shipping is embedded in global value chains.

The regime influences:

• Shipowner Scope 1 emissions.

• Cargo owner Scope 3 transport emissions.

• Retailer and manufacturer logistics footprints.

• Fuel supplier product emissions.

• Port and bunkering infrastructure.

• Shipbuilding and retrofit demand.

• Commodity trade carbon intensity.

Companies using maritime freight must:

• Track shipping-related emissions.

• Understand carrier compliance costs.

• Integrate maritime emissions into Scope 3 Category 4 and Category 9 reporting.

• Prepare for low-carbon freight procurement.

• Engage carriers on fuel mix and compliance strategy.

• Assess cost pass-through in contracts.

This creates a transport-linked Scope 3 governance model, where maritime emissions are attributed to traded goods, logistics contracts, and freight procurement decisions.

The broader implication is that shipping emissions are no longer only a carrier issue. Cargo owners, freight forwarders, insurers, ports, and banks will increasingly need emissions data from shipping providers to support their own climate disclosures and procurement choices.

3. GHG Fuel Intensity and Data Architecture

A defining feature is the GHG Fuel Intensity standard, which measures emissions per unit of energy used by a ship.

The system requires:

• Fuel consumption data.

• Fuel lifecycle emissions factors.

• Well-to-wake accounting.

• Ship-level annual compliance balances.

• Verification of reported data.

• Calculation of surplus or deficit against GFI limits.

The GFI approach is designed to reduce the greenhouse gas intensity of marine fuels over time. IMO guidance states that the 2023 GHG Strategy’s mid-term measures consist of a technical element: a goal-based marine fuel standard regulating phased reductions in fuel GHG intensity.

This creates a fuel-data governance system, where compliance depends on accurate information about:

• Fuel type.Fuel quantity.

• Lifecycle emissions intensity.

• Voyage and ship activity.

• Energy consumption.

• Regulatory thresholds.

Fuel suppliers must therefore support more detailed lifecycle emissions documentation, while ship operators must maintain auditable emissions data systems.

4. GHG Pricing, Compliance Units, and Net-zero Fund

The economic element of the framework is designed to create a financial incentive to reduce emissions.

Covered ships that exceed permitted GHG intensity thresholds may need to:

• Purchase remedial units.

• Pay into the IMO Net-zero Fund.

• Use surplus units from over-compliance.

• Trade or transfer compliance balances where allowed.

• Invest in cleaner fuels or efficiency to reduce future liabilities.

The framework, therefore, creates a carbon-cost governance layer, where emissions intensity affects operating costs and freight economics.

Revenues are intended to support:

• Shipping decarbonization.

• Zero and near-zero fuel deployment.

• Technology development.

• Support for developing countries and vulnerable states.

• Just and equitable transition measures.

The framework has been described as combining a global fuel standard with a pricing mechanism, though the final legal architecture is still subject to adoption and further negotiation.

5. Sustainable Marine Fuels, Infrastructure, and Technology Transition

The framework is intended to accelerate demand for:

• Green methanol.

• Green ammonia.

• Hydrogen-based fuels.

• Advanced biofuels.

• E-fuels.

• Battery-electric and hybrid systems for some vessel types.

• Wind-assisted propulsion.

• Energy efficiency technologies.

• Onshore power and port infrastructure.

Shipowners and operators must:

• Assess fuel availability.

• Plan fleet retrofits.

• Evaluate dual-fuel vessels.

• Secure low-emission fuel supply.

• Manage fuel-price risk.

• Coordinate with ports and bunkering hubs.

This creates a marine fuel transition governance layer, where compliance depends not only on ship technology but also on global fuel supply chains.

Fuel producers, ports, and energy companies become essential regulated-adjacent actors because ship compliance depends on the availability, certification, and lifecycle emissions of fuels.

6. Audit, Verification, and Monitoring Systems

The framework will rely on:

• Flag state enforcement.

• Recognized organizations and class societies.

• Ship-level reporting.

• Fuel data verification.

• Compliance balance calculations.

• IMO registry or fund administration.

• Port state control risk where applicable.

Covered entities must:

• Maintain verified emissions records.

• Submit compliance data.

• Retain documentation on fuel use and emissions factors.

• Demonstrate compliance with GFI thresholds.

• Resolve deficits through approved mechanisms.

• Address non-compliance within required timelines.

This creates a hybrid verification regime, combining regulatory reporting, third-party verification, and state enforcement under MARPOL Annex VI.

Once adopted, IMO states that regulations are expected to enter into force 16 months later under the tacit acceptance procedure, at which point governments are responsible for enforcement.

7. Procurement Integration and Market Segmentation

The framework will influence procurement across maritime value chains through:

• Freight contracts.

• Charterparty clauses.

• Fuel procurement agreements.

• Shipbuilding specifications.

• Port service contracts.

• Cargo owner sustainability requirements.

• Green shipping corridors.

• Sustainable freight products.

Market participants are likely to be segmented based on:

• Vessel type.

• Ship size.

• Fuel intensity.

• Fuel availability.

• Route exposure.

• Fleet age.

• Compliance cost exposure.

• Ability to access zero or near-zero fuels.

High-impact entities face:

Higher compliance costs
Stronger data requirements
More pressure from cargo owners
Potential preferential treatment for low-emission vessels
Higher exposure to regional regimes such as the EU ETS and FuelEU Maritime

This creates a market-access and cost-pass-through governance model, where emissions performance affects commercial competitiveness.

8. Upstream Cascade Requirements

The IMO Net-zero Framework will cascade into upstream and adjacent industries.

Affected actors include:

• Marine fuel suppliers.

• Ports and bunkering providers.

• Shipyards.

• Engine manufacturers.

• Technology suppliers.

• Classification societies.

• Banks and leasing companies.

• Insurers.

• Freight forwarders.

• Cargo owners.

These actors must support:

• Fuel certification.

• Lifecycle emissions data.

• Infrastructure investment.

• Fleet retrofit capability.

• Verified emissions documentation.

• Low-carbon freight services.

This extends governance beyond ships into the full maritime decarbonisation ecosystem.

9. Lifecycle and Product-Level Implications

The framework directly affects:

• Transport emissions embedded in products.

• Carbon intensity of imported goods.

• Commodity freight emissions.

• Retail and manufacturing Scope 3 disclosures.

• Shipping cost structures.

• Fuel supply chains.

• Fleet investment decisions.

Corporate buyers of shipping services will need to understand:

• Which carriers are compliant.

• Which fuels are used.

• How compliance costs are passed through.

• Whether low-carbon freight can reduce Scope 3.

• How shipping emissions affect product carbon footprints.

This aligns maritime regulation with product-level and value-chain emissions accounting, especially for globally traded goods.

Important Deadlines

Key timelines include:

• 2023: IMO adopted the revised GHG Strategy targeting net-zero emissions from international shipping by or around 2050.

• April 2025: MEPC 83 approved the draft IMO Net-zero Framework.

• October 2025: formal adoption had been expected at an extraordinary MEPC session.

• Late 2025: adoption was delayed, with discussions adjourned.

• 2026: discussions are expected to resume, with reports indicating a reconvened session scheduled for November 2026.

• Post-adoption: regulations are expected to enter into force 16 months later under tacit acceptance.

• 2028 onward: operational compliance has been widely expected to begin around this period, depending on final adoption timing.

The IMO FAQ confirms that the framework was approved at MEPC 83 in April 2025, that formal adoption was targeted for October 2025, and that discussions have been adjourned until 2026.

Current Status

The framework is approved in principle but not yet formally adopted.

• Approved by IMO MEPC 83 in April 2025.

• Intended as amendments to MARPOL Annex VI.

• Formal adoption was delayed after political disagreement.

• Discussions adjourned until 2026.

• Detailed implementation guidelines still under development.

• Shipping companies are expected to continue preparing despite uncertainty.

The delay creates regulatory uncertainty, but the direction of travel remains clear: international shipping is moving toward mandatory fuel-intensity regulation, emissions pricing, and verified ship-level climate compliance. Reuters reported that the one-year postponement creates uncertainty but that stakeholders should continue preparing by improving emissions data systems, contract structures, and low-carbon fuel strategies.

Penalties for Non-Compliance

Expected enforcement mechanisms may include:

• Requirement to purchase remedial units.

• Payments into the IMO Net-zero Fund

• Deficit correction obligations.

• Flag state enforcement action.

• Port state control exposure.

• Commercial penalties through charter and freight contracts.

• Loss of access to green freight markets.

• Higher financing or insurance scrutiny.

This creates a direct link between emissions performance, regulatory compliance, and market access.

Examples of Known Failure Modes

Typical compliance risks include:

• Incomplete or inaccurate fuel data.

• Poor lifecycle emissions documentation.

• Use of high-GHG fuels without compliance planning.

• Insufficient access to zero or near-zero fuels.

• Failure to account for cost pass-through in charter contracts.

• Inadequate verification systems.

• Unclear responsibility between owner, operator, and charterer.

• Fleet investment misalignment.

• Port and fuel infrastructure bottlenecks.

These failures can create regulatory deficits, financial exposure, and commercial disadvantage.

Resources

• https://www.imo.org/en/mediacentre/pressbriefings/pages/imo-approves-netzero-regulations.aspx

• https://www.imo.org/en/mediacentre/hottopics/pages/faqs-the-imo-net-zero-framework.aspx

• https://www.imo.org/en/mediacentre/hottopics/pages/cutting-ghg-emissions.aspx

• https://www.dnv.com/maritime/insights/topics/net-zero-framework/