The IMO NZF: the first global carbon pricing agreement

The path to shipping’s decarbonisation has not been an easy one. Following years of intense negotiations and compromises, the International Maritime Organization (IMO) agreed in April 2025 the IMO Net-Zero Framework (NZF) of mid-term measures for the reduction of GHG emissions from ships.

The IMO NZF, if adopted in October 2025, will establish the first binding global carbon pricing mechanism across an entire sector. It is a positive outcome that it includes the ‘polluter pays’ principle, a position that the Union of Greek Shipowners (UGS) has decisively supported. The IMO NZF allows for the ship to recover any costs incurred under it from the entity which has the operational responsibility, meaning the entity responsible for determining the fuel used, the cargo carried, the route, and/or the speed of the ship.

However, the IMO NZF is not without its drawbacks. On the contrary, it represents serious challenges, such as:

• A complicated GHG Fuel Intensity (GFI) trajectory with unrealistic annual emissions reduction targets and disproportionately high penalties for under-compliant ships in the absence of available alternative fuels.
• Critical elements which remain undefined, such as the methodology for the rewards for zero or near-zero (ZNZ) fuels and technologies, and the IMO Net-Zero Fund’s governance and disbursement mechanisms.
• The fact that important transitional fuels, such as LNG, are unfairly treated, thereby undermining significant investments made by the industry, which are essential for enabling its energy transition to decarbonisation.

Given the very limited availability of compliant fuels, particularly during the initial transition period, it is imperative to support all fuels and technologies, including transitional options such as LNG and biofuels - that contribute significantly to reducing GHG emissions.

Robust and fit-for-purpose guidelines are essential to complement the IMO’s agreed net-zero framework. These guidelines should be developed through close consultation with the industry using its expert advice.

In addition, to maintain a level playing field and prevent distortion of competition, the shipping industry’s involvement in the governance of the IMO Net-Zero Fund, which is expected to generate substantial annual revenues - is particularly important. The industry places high priority on ensuring that a significant portion of these revenues is allocated to the decarbonisation of shipping and supported by rigorous oversight mechanisms to ensure the effective deployment of funds.

Robust and fit-for-purpose guidelines will be needed to complement the IMO NZF, if adopted, ensuring its viability.