IMO carbon pricing expected to be adopted next week

Governments at the UN’s International Maritime Organization (IMO) are expected to adopt the world’s first global carbon pricing scheme on any international polluter: global shipping, at the Extraordinary Session of the Marine Environment Protection Committee (MEPC E.2) in London on 14-17 October.

The planned adoption of the legally-binding regulation, the IMO Net-Zero Framework (NZF), will be followed by a round of technical negotiations (ISWG-GHG-20) on key details on design and implementation of this flagship climate regulation, on 20-24 October.

Why this matters: Sealing the deal next week on the IMO NZF, agreed in a vote back in April, would be the biggest victory for climate diplomacy in recent years. It would also send an important signal ahead of the COP in Belém that multilateralism can deliver climate action.

Key supporters expected to include: most of the BRICS, the EU27, Canada, UK, South Korea, Japan, Singapore, Panama, Chile.

The shipping industry supports adoption through the World Shipping Council (WSC), with over 180 global shipping companies stating the NZF is necessary to provide a global regulatory certainty that “allows the industry to do its job.”

A minority of petrostates led by Saudi Arabia and the US have been trying, and failing, to undermine the agreement since April. Pacific Island states abstained during the April vote as a protest against the process.

Critical policy details in the NZF still remain to be finalized between the adoption and 2027 when it enters into force, including the definition and rewards for zero-emission energy and technologies and how the revenues, worth up to $15 billion/year from 2030, will be spent.

Hon. Simon Kofe, Minister of Justice, Communication and Foreign Affairs, Tuvalu, said: “While larger, wealthier nations debate the threat to livelihoods, Pacific Island nations are forced to consider the threat to lives and to statehood itself. That is the scale of what is at stake. We are here [at the IMO] to lead high ambition, as we always have. Our abstention at MEPC 83 was a signal: Tuvalu will not rubber-stamp weak outcomes. At this Extraordinary Session, we call on every delegation to set a course toward a just and equitable transition. This is about more than shipping. It is about survival. The IMO must find the courage to deliver this time.” Read here the full statement by Minister Kofe from Tuvalu, a key member of the high-ambition coalition of Pacific Island states at the IMO (6PAC+).

Emma Fenton, Senior Diplomacy Director at Opportunity Green, said: “The successful adoption of the IMO Net-Zero Framework is essential as a baseline for the international shipping industry to achieve the emissions reductions that are so desperately needed. But that is only the start – not the end – of states’ abilities to push for the ambition demanded by climate vulnerable countries. Negotiations around the definition of zero, or near-zero fuels and the distribution of revenues will cement this agreement as one that prioritises justice and equity in the maritime transition.” A full press release from Opportunity Green is available here.

Maria Ogbugo, Maritime Consultant at the Africa Policy Research Institute, said “The Net Zero Fund established under the IMO Net Zero Framework offers a crucial opportunity to make the maritime transition more equitable. For Africa, where fleets are limited and ageing, and where access to traditional ship finance has been scarce, fair access to this Fund could enable the renewal of vessels and support the continent’s ambitions under the African Continental Free Trade Area. To ensure a truly just and inclusive transition, it’s essential that the Fund’s design includes dedicated financing windows for developing economies.”

Delaine McCullough, President of the Clean Shipping Coalition (CSC), said: “The IMO’s Net-Zero Framework is far from perfect – lacking ambition, proper safeguards against the uptake on unsustainable fuels, and failing to provide the levels of guaranteed finance needed for a just and equitable shipping energy transition – but it is a vital step forward. During this meeting, IMO Member States must not only adopt the Net-Zero Framework but agree on a realistic and robust plan for fixing the framework’s failings and putting shipping on a truly sustainable path to zero-emission shipping.”

A full press release from the CSC will be available on their website on 14 October.

Dr Nishatabbas Rehmatulla, Principal Research Fellow at the UCL Energy Institute, Shipping & Oceans Research Group, said: “The clarity that will be given with the adoption of the Net Zero Framework should not be underestimated. This key policy signal and associated guidelines have the potential to unlock billions of dollars of investment in the production of scalable zero emission fuels early on. Only with the adoption as soon as possible does the IMO have a chance to meet its objectives from the Revised GHG strategy for zero- or near-zero emission fuels making up 5% to 10% of shipping fuel by 2030.”

Davina Hurt, Climate Policy Director with Pacific Environment, said: “Member states have never waited for permission to lead. Regardless of the United States’ stance, member states must hold firm and get the Net-Zero Framework over the finish line in October. The International Maritime Organization’s April agreement is a win for our climate, health and oceans, marking the first time the shipping industry agreed to a global carbon price. Now, they must see it through—not only for the planet we share, but to honor the family legacy we owe to future generations: a legacy of health, security, and prosperity. We applaud this decisive step toward a just, zero-emissions future in shipping.”

Elissama Menezes, Director at Equal Routes, said: “Ahead of the IMO Net-Zero Framework vote, the facts are undeniable: LNG is not a viable solution for shipping. Methane — a highly potent greenhouse gas, 82 times that of CO2 — from LNG-fueled ships grew by 180% between 2016 and 2023, directly contradicting industry rhetoric. LNG is fundamentally incompatible with shipping’s decarbonization goals. Regardless of its origin (fossil, bio-, or e-LNG), methane leaks across the entire fuel lifecycle. LNG must be excluded from the Net-Zero Framework, or the IMO risks enabling a false solution and undermining its climate credibility.”

Countries meet on 14-17 October for the Extraordinary Session of the Marine Environment Protection Committee (MEPC E.2) to formally adopt the IMO NZF designed to help achieve the IMO’s climate targets set out in the 2023 Revised Strategy.

The Framework is made up of two integrated components: 1) two-tier carbon intensity targets and 2) emissions pricing and rewards for ships that use zero or near-zero emission energy and technologies (ZNZs).

The IMO agreed on the NZF in a vote in April at MEPC 83, with a clear majority of countries (63) voting in favor, including China, Brazil, the EU27, South Korea, and India, versus a minority opposition (16) led by the Saudis, UAE and Russia. 25 countries abstained, including Pacific Island states who chose to abstain as a protest against the decision-making process and the weak level of ambition in the agreed Framework.

The US rejected the NZF in a statement issued in August. This is not the first time the US has tried and failed to derail an IMO agreement. Diplomatic sources say the opposition is still very far from having the numbers to stop the majority in favor.

Transport & Environment and UCL warn that the Framework, as it currently stands, falls short on both emission reduction (leading to only around 10% absolute emission reduction by 2030, as opposed to the agreed striving goal of 30%) and on generating sufficient revenues for an equitable energy transition. The Framework is expected to raise $15 billion per year max, which is much lower than the annual $60 billion fund that could have been generated under a flat carbon levy.

They warn that without tough guidelines on policy design and implementation, which the IMO still needs to finalize, the Framework will incentivize cheap but unsustainable solutions, like high-risk biofuels and LNG. Pacific Island states and NGOs also call for the guidelines to ensure a speedy out-of-sector revenue spending while prioritizing developing and most vulnerable countries.

The IMO talks will discuss the guidelines in a technical working group (ISWG-GHG-20) on 20-24 October, the week after the planned adoption, and throughout 2026.

Source: Shipping & Oceans Research Group