IMO negotiations on carbon pricing move forward, despite delay in adoption
LONDON: The International Maritime Organization (IMO) continued negotiating on key policy details in the Net-Zero Framework (NZF), at the working group talks (ISWG-GHG20) on 20-24 October in London.
Last week the IMO agreed to postpone the NZF’s adoption by one year, but discussions continued this week on the design and implementation of this flagship climate regulation, including clean energy and how to spend the carbon pricing revenues, worth up to $15 billion a year from 2030.
Why this matters: The NZF is a critical policy tool based on carbon pricing that the industry needs to get closer towards its 2023 Revised Strategy goals: equitable transition to zero-emission by 2050.
The ISWG-GHG-20 meeting largely resembled business as usual at the IMO, with governments engaging in constructive discussions on the Framework’s guidelines. This was in contrast to chaotic negotiations the week before, which led to the NZF adoption delay.
Countries disagreed on the role of biofuels in shipping’s clean transition, with Brazil, Indonesia and several African countries pushing for a “technology neutral” approach that would favour cheap, existing sources of biofuels, including food and feed stock (e.g. soy and palm oil). This is opposed by the EU and Pacific Island states, who are concerned about sustainability and scalability, and favour renewable e-fuels as a long-term solution.
Researchers, civil society groups and international campaigners have repeatedly warned against the use of food and feed-based biofuels on ships on environmental, climate and human rights grounds, and urge the IMO to disincentivise this fuel option. One way to do this is by considering the full lifecycle of emissions of marine fuels, including accounting of indirect land-use change (ILUC) emissions, in the Life Cycle Assessment (LCA) guidelines. This has received the support of Mexico, UK, and several Pacific Islands who also expressed their concerns for addressing food security and environmental sustainability. The LCA guidelines are set to be finalised in April 2026.
Member States and industry expressed broad support for the inclusion of wind propulsion as a zero- or near-zero (ZNZ) energy source alongside solar and shore power, recognizing their contribution to emissions reductions.
Governments also discussed the IMO Net-Zero Fund, which according to experts must be equitable in order to ensure climate-vulnerable countries are not left behind in the transition. The Chair encouraged countries to consolidate their proposals ahead of the next round of negotiations in April.
The US, Saudi Arabia and other oil-producing countries responsible for the NZF adoption delay objected to any further work on the guidelines, deeming it premature until the NZF is adopted. This puzzled several delegates who pointed out that only last week the US and Saudi Arabia argued the NZF cannot be adopted due to key policy clarifications still missing.
Dr. Alison Shaw, IMO Policy Manager at T&E, said: “While adoption of the IMO Net-Zero Framework was paused last week, negotiations this week advanced on the implementation guidelines nonetheless. The framework’s success will hinge on strong, coherent guidance that both incentivizes long-term green e-fuel production and use, and safeguards against unsustainable fuels, like crop-based biofuels, with uncaptured environmental impacts. Many member states acknowledged the importance of both aims, though uncertainty over the framework’s eventual adoption remained a clear backdrop to discussions.’”
Natacha Stamatiou, IMO GHG Lead, Global Shipping, Environmental Defense Fund, said: “Last week was undoubtedly challenging, marked by hesitation and differing views on how best to move forward, reflecting the broader tensions we have all been navigating. But the IMO can’t stand still while the world moves forward. Luckily, this week, more voices joined the conversation, and the discussions took on a constructive and more respectful tone. It was a meaningful step toward rebuilding the confidence, transparency, and integrity we need to deliver the pollution cuts future generations deserve.”
Christiaan de Beukelaer, Senior Lecturer in Culture and Climate at the University of Melbourne and an IMO observer, said: “Over the last two weeks, the US, Saudi Arabia and other petro-states engaged in textbook climate obstruction. Last week, they opposed the adoption the Net-Zero Framework for lack of detail. This week, they opposed discussing details ahead of adoption. This Catch-22 of their own making had little impact during IWSG-GHG 20. Under the conciliatory guidance of Working Group Chair Sveinung Oftedahl, the vast majority of delegations in the room worked on ensuring that the IMO can deliver on its unanimously-adopted 2023 GHG Strategy through the Net-Zero Framework. This made the saboteurs sound like a broken record, which the room quietly ignored.”
Jamie Yates, Climate & Renewable Energy Manager, Pacific Environment, said: “Despite last week’s delay tactics and bullying, we’ve moved past obstruction and into real progress with productive discussions now shaping the Net Zero Framework and how it will be implemented. We applaud the member states and industry leaders driving this forward.”
Anaïs Rios, Shipping Policy Officer, Seas At Risk, said: “Wind propulsion is back in the spotlight at the IMO this week, with countries voicing support and industry data strengthening the case. The Net Zero Framework may be delayed but the work hasn’t stopped, and when adoption comes next year, implementation can be quick. Governments must now ensure that these guidelines enable a global scale up of wind propulsion: One of the few solutions that cuts fuel bills, slashes emissions and keeps shipping competitive. The technology is here, now the rules need to catch up.”
Gavin Allwright, Secretary General at International Windship Association (IWSA), said: “With continued advances in wind propulsion, we’re now approaching the 100 large-vessel milestone, representing around 5 million DWT, and the fleet is set to roughly double again within the next 12 months. The technology is proven, scalable, and available globally today. Companies don’t have to wait for international regulation to catch up – they can make a sure bet on wind now and start reaping the benefits of a future-proof, truly zero-cost and zero-emissions energy source.”
Emma Fenton, Senior Diplomacy Director at Opportunity Green, said: “Despite last week’s devastating outcome, countries came together to work on the supporting guidelines that will provide the much-needed clarity on the IMO Net-Zero Framework. We were pleased to see constructive discussions on the IMO Net-Zero Fund, ZNZ reward methodology and guidelines related to GHG Fuel Intensity (GFI). However, with the Net-Zero Framework hanging in the balance, and much more still to be discussed, it is as important as ever for States to prioritise justice and equity in their decision-making, and ultimately, to continue to push for the adoption of the Net-Zero Framework.”
Next steps:
Next time the IMO meets is for a two-part summit in 2026: technical working group talks (ISWG-GHG-21) on 20-24 April and the 84th session of the Marine Environment Protection Committee (MEPC 84) on 27 April-1 May.
MEPC 84 is planned to finalise important decisions on clean energy under the NZF, including the LCA guidelines. LCA guidelines are essential for evaluating the environmental impact of marine fuels and for determining vessels’ compliance with NZF.
Sources: T&E, Environmental Defense Fund, Pacific Environment, International Windship Association (IWSA), Seas At Risk, Opportunity Green