TImplementing the Net Zero framework may encounter more hurdles along the way, with time still needed to overcome them. In its latest weekly report, shipbroker Gibson said: “Last month, the International Maritime Organization (IMO) held its 84th session of the Marine Environment Protection Committee (MEPC 84) in London. The meeting followed a volatile second special session of the Marine Environment Protection Committee last October, where a coalition of countries succeeded in delaying the adoption of the IMO’s long-awaited net zero framework (NZF). As we reported a year ago, the framework, which aims to introduce a global carbon pricing mechanism for shipping, has faced difficulties Criticism, particularly from the Trump administration, during the 84th MEP meeting, remained largely unchanged, as did the group of countries supporting it. However, many parties recognized that a compromise was needed, although many who supported the framework felt that there was little room to “water down” it.
According to Gibson, “Opponents of the NZF were concerned that it was unrealistic and relied on fuels not yet widely available, leading to high shipping costs and the risk of non-compliance due to infrastructure and capacity issues. The concept of the NZF, the associated economic burden and uncertainty over the use of revenues, governance and its legal basis also created friction between member states. To overcome these issues, the two major nations, Liberia and Panama, which fly the flag on about 30% of the global fleet, along with Argentine delegates proposed a revised approach centered around a global fuel intensity (GFI) target.
Source: Gibson Shipbrokers Limited
The proposal links GFI amendments to clear market uptake of low-carbon fuels while also taking into account technical factors, affordability, availability and scalability. At the same time, the proposal specified that there would be no IMO Fund. Japan has also submitted a revised proposal aimed at bridging the gap between the parties and removing reciprocal payments to the IMO’s proposed NZF. Instead, it proposed trading compliance deficits, allowing ships to meet obligations by transferring surplus units generated by over-compliant ships, while easing the GFI reduction path from 2030 onwards. Both proposals also raised concerns about excluding key transitional fuels such as liquefied natural gas. In the end, neither proposal received enough support to make further progress.”
“So where does this leave the New Zealand Framework now? Further refinement will be needed, as the original proposed framework is unlikely to be adopted in its current form. Negotiations will continue in two intersessional working groups through 2026. In any case, the earliest the New Zealand Framework could now come into force is 2029 if it is adopted at the 85th Marine Environment Protection Committee in December, which also looks like an uphill battle. And even if a revised version of the New Zealand Framework is approved New Zealand, the US and its allies may still be able to and threatens sanctions against anyone who imposes them against US interests, so, for shipowners, the wait for regulatory certainty continues, but despite this, investment in new construction remains high, and the IMO delay appears to have encouraged many owners to simply invest in ships powered by conventional fuel.
Nikos Rousanoglou, Global Hellenic Shipping News
