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From Oct. 14 to Oct. 17, the <a href="https://www.law360.com/agencies/international-maritime-organization">International Maritime Organization</a>'s Marine Environment Protection Committee, or MEPC, held an extraordinary session to consider the adoption of amendments to the International Convention for the Prevention of Pollution from Ships, commonly known as MARPOL. The amendments that were under consideration would be to MARPOL Annex VI, governing air pollution, and include the proposed IMO Net-Zero Framework, or NZF.  The session concluded with a <a href="https://www.law360.com/articles/2400771/un-shipping-agency-delays-carbon-price-opposed-by-us-">decision to adjourn</a> and reconvene in 12 months, allowing additional time to consider revisions to the NZF and for member states to build consensus. In the interim, technical and implementation details are being developed and refined through IMO bodies, notably the Working Group on the Reduction of Greenhouse Gas Emissions from Ships, which met from Oct. 20 to 24, to advance NZF guidelines. Meanwhile, the U.S. continues to reaffirm its strong opposition to the NZF, while outlining potential retaliatory measures. But <a href="https://www.law360.com/agencies/european-union-1">European Union</a> decarbonization regulations remain in force, and regional frameworks continue to evolve in the absence of unified IMO action. This regulatory uncertainty highlights the importance of proactive engagement with policymakers and strategic planning across various potential compliance scenarios.

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The IMO Net-Zero Framework: Scope and Ambition

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The NZF is the centerpiece of the IMO's medium-term GHG reduction measures, intended to be formalized as a new Chapter 5 of MARPOL Annex VI. Its primary objective is to achieve net-zero GHG emissions from international shipping by 2050, in line with the 2023 IMO Strategy on GHG Emissions. The NZF applies to all vessels of 5,000 gross tons and above on international voyages, with limited exceptions for vessels operating solely within national waters, nonmechanically propelled vessels and certain offshore platforms. The draft regulations are built on two main pillars:

Technical element: A standard that mandates progressive reductions in the GHG fuel intensity of marine fuels, measured from production to use or on a well-to-wake basis.

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Economic element: A global GHG emissions pricing mechanism, requiring vessels that do not meet the GHG fuel intensity targets to purchase remedial units, with revenues paid into the IMO Net-Zero Fund by the shipowner.

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This dual approach is designed, in theory, to both drive the uptake of zero and near-zero GHG fuels and technologies, and create a level playing field for the global fleet. As currently drafted, each vessel would need to calculate its annual GHG fuel intensity, based on all the fuels it used, on a well-to-wake basis. The target GHG fuel intensity is structured into two tiers that vessels would need to meet: a base target (Tier 2) and a more stringent direct compliance target (Tier 1). Both targets get progressively more stringent annually.

Key Regulatory Mechanisms and Compliance Pathways

At the close of each reporting year, vessels would need to assess their GHG fuel intensity compliance. Vessels that meet or exceed the direct compliance target would earn surplus units, which may be banked for up to two years, traded with other vessels or voluntarily canceled as a climate mitigation measure. Conversely, vessels that fall short would need to offset their deficit by acquiring surplus units from other vessels — an approach known as pooled compliance — using previously banked surplus units, or purchasing remedial units from the IMO at benchmark prices. For the 2028–2030 period, remedial unit prices were to be set at $100 per ton of carbon dioxide equivalent for Tier 1 and $380 per ton for Tier 2. In April, the 83rd session of the MEPC endorsed the NZF text and set in motion a process for formal adoption at the October extraordinary session. Broad support was evident at the MEPC session, where the NZF advanced by simple majority. But geopolitical dynamics evolved in the intervening months, including escalating U.S. opposition and explicit threats of reciprocal measures targeted at NZF‑supporting countries.

Recent IMO Actions and the Adjournment Decision

Notably, on Aug. 12, the U.S. secretaries of state, energy and transportation issued a joint statement, with the stated goal of "protecting American consumers and shipping industries by defeating the International Maritime Organization's Net-Zero Framework, aka global carbon tax." The Trump administration made it clear that it unequivocally rejected the NZF proposal; stated it would not tolerate any action that increases costs for U.S. citizens, shipping and energy companies, and their customers; and threatened retaliation against those in support. More notably, on Oct. 10, days before the MEPC extraordinary session, the secretaries of state, energy and transportation issued another joint statement, asserting that the administration "unequivocally rejects this proposal before the IMO," and encouraging other nations "to join in rejecting adoption of the NZF." The U.S. again threatened retaliation for any IMO member states that support the proposal, which included blocking their vessels from U.S. ports, visa restrictions, additional port fees and sanctions. The decision to adjourn stemmed from a consensus that the NZF, as written, contained uncertainties and concerns regarding the type of fuels that would be used to reach net-zero emissions, fuel availability, the infrastructure for new fuels, and port modernization required to achieve this goal. Additionally, the decision made clear that clarification and more detail were needed to understand how the funds collected under the NZF would be disbursed and how the credits would operate. Against that backdrop, the MEPC agreed to adjourn the extraordinary session and reconvene in 12 months, while committing to continued work on NZF implementation guidelines and further consensus‑building among member states.  The MEPC's decision preserves the path toward a unified global maritime decarbonization framework, while acknowledging the geopolitical and technical complexities at play. With implementation work advancing at the working group, and member states engaging in intensive negotiations, the outcome will shape the trajectory of the maritime sector's climate transition, the coherence of global regulatory architecture, and the competitive landscape for shipping and its supply chain. In the meantime, the persistence of regional regimes and the prospect of trade-linked responses underscore the need for careful strategic planning and sustained engagement across policy, operational and investment horizons.

U.S. opposition has been sustained and unequivocal during the Trump administration, and is unlikely to change in the coming years if the economic element of the draft regulations remains in place. The U.S. delegation withdrew from the 83rd session of the MEPC on April 9, urging other governments to reconsider support for the NZF. In the August joint statement, the U.S. reiterated its view that the NZF is effectively a global carbon tax imposed by an unaccountable U.N. body, disadvantaging American consumers and supply chains while favoring competitors. As noted previously, on the eve of the October extraordinary session, a further U.S. joint policy statement enumerated potential punitive actions against countries that voted to adopt the NZF. These punitive measures included targeted investigations and regulatory actions to address anticompetitive practices; restrictions on port access for certain flagged vessels; tightened visa rules and fees for maritime crews; port fees on vessels owned, operated or flagged by NZF‑supporting nations; and sanctions on officials advocating climate policies perceived to burden U.S. consumers. This escalation coincided with amendments from the <a href="https://www.law360.com/agencies/office-of-the-u-s-trade-representative">Office of the U.S. Trade Representative</a> to its action under Section 301 of the Trade Act of 1974 addressing China's maritime, logistics and shipbuilding sectors. These amendments highlight the administration's broader strategy of leveraging the maritime domain to advance international and domestic policy objectives. We note, though, that this USTR action was also delayed by one year.

Voting Dynamics and Member State Positions

The April preliminary approval saw about 63 countries in favor, 16 opposed and 24 abstentions. The opposing bloc included the U.S., Saudi Arabia, Bahrain, Iran, Iraq, Jordan, Kuwait, Lebanon, Malaysia, Oman, Pakistan, Qatar, Russia, Thailand, the United Arab Emirates, Venezuela and Yemen. The approving group included the European Union, China, Japan, Brazil and India, with expectations that Canada, the U.K., South Korea, Singapore, Chile and others would align in favor ahead of final adoption. Final adoption will require a two‑thirds majority, making alignment among major flag states determinative. The U.S.' October ultimatum may further shape coalition cohesion, as member states weigh potential costs and trade implications against the benefits of a unified global decarbonization regime. Implications for EU and Regional Regimes IMO adoption of the NZF would have triggered reviews and possible adjustments to European Union measures governing maritime GHGs, including the Emissions Trading System and FuelEU Maritime regulation. With the NZF deferred, those regimes remain in place unchanged, and the industry continues to navigate a fragmented landscape of regional and national rules related to GHG emissions and marine fuels. This divergence complicates compliance planning, investment decisions and supply chain operations across global routes.

In the coming months, industry stakeholders, including shipowners, charterers, fuel suppliers, shipbuilders, ports and financial institutions, face continued uncertainty and should prepare for multiple scenarios. These include the potential of a single framework, whether it be the NZF as currently drafted or with significant amendments, or a patchwork of regional efforts if the NZF is ultimately not approved. The working group's ongoing work is poised to refine critical elements of the NZF's implementation guidance, including lifecycle assessment methodologies, fuel certification protocols, data verification processes, and the design of reward and pricing mechanisms. Simultaneously, U.S. efforts to shape the negotiations through trade, port, visa and sanctions policy will inevitably influence consensus‑building. Stakeholders should remain engaged with IMO and member state deliberations while tracking developments across regional regimes, particularly in the EU. For companies beyond shipping, the U.S. approach to the NZF reflects a broader pattern of leveraging international environmental issues to advance domestic industrial priorities and inform bilateral trade dynamics.

The MEPC's decision to adjourn and reconvene in 12 months preserves the path toward a unified global maritime decarbonization framework, while acknowledging the geopolitical and technical complexities at play. With implementation work advancing at the working group, and member states engaged in intensive negotiations, the outcome will shape the trajectory of the maritime sector's climate transition, the coherence of global regulatory architecture, and the competitive landscape for shipping and its supply chain. In the meantime, the persistence of regional regimes and the prospect of trade‑linked responses underscore the need for careful strategic planning and sustained engagement across policy, operational and investment horizons.

"Global Net-Zero Shipping Framework Faces Rough Waters," by Jeanne M. Grasso, Holli B. Packer, and Vanessa C. DiDomenico was published in&nbsp;<a href="https://www.law360.com/articles/2413963">Law360</a>&nbsp;on November 24, 2025.

Global Net-Zero Shipping Framework Faces Rough Waters

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Global Net-Zero Shipping Framework Faces Rough Waters

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