The IMO’s 2025 Net-Zero Framework: What’s in It, When It Bites, and How to Comply

In April 2025, the International Maritime Organization (IMO) took a landmark step toward decarbonising shipping. The Marine Environment Protection Committee (MEPC 83) approved the draft legal package informally known as the IMO Net-Zero Framework, combining:

• A goal-based marine fuel standard that ratchets down the well-to-wake greenhouse gas (GHG) intensity of energy used on board vessels.

• A global GHG pricing and reward mechanism designed to incentivise cleaner fuels and penalise higher-emitting operations.

The draft amendments to MARPOL Annex VI have been cleared for circulation and are expected to be adopted at an extraordinary MEPC session in October 2025 (MEPC/ES.2). These changes deliver the “mid-term measures” promised under the 2023 IMO GHG Strategy, which targets net-zero “by or around 2050” with key checkpoints in 2030 and 2040.

Why the IMO Net-Zero Framework Matters

International shipping accounts for around 2–3% of global greenhouse gas emissions. These emissions have continued to rise, highlighting the urgent need for coordinated global action. Because ships operate across national boundaries, the IMO provides the essential platform for harmonised global regulations — preventing fragmentation and “pollution havens.”

Who the Regulations Apply To — and When

The IMO Net-Zero Framework targets ocean-going ships of 5,000 gross tonnage and above on international voyages.

• Draft approved: April 2025 (MEPC 83)

• Formal adoption expected: October 2025 (MEPC/ES.2)

• Likely entry into force: ~2027

• Operations and compliance obligations: ~2028

Understanding Well-to-Wake Lifecycle Measurement

A central feature of the new regulations is well-to-wake lifecycle measurement — a method that calculates the total GHG emissions of marine fuels from extraction (“well”) to combustion on board (“wake”). This ensures a true assessment of climate impact across the entire fuel chain.

The Three Stages of the Fuel Lifecycle

• Well-to-Tank (WTT) – Upstream emissions from extraction, processing, and transport.

• Tank-to-Wake (TTW) – Combustion emissions released when fuel is used on board.

• Well-to-Wake (WTW) – Total lifecycle emissions, including CO₂, CH₄, N₂O, and more.

What the IMO Net-Zero Framework Includes

The framework is a proposed global regulatory package to cut GHG emissions from international shipping and achieve net-zero “by or around 2050.” It does this by combining:

• Mandatory fuel intensity standards (emissions per unit of energy)

• A pricing and crediting mechanism (penalties and rewards)

Once adopted, these measures will be incorporated into MARPOL Annex VI as binding regulation for most international vessels.

Core Mechanics: How It Works

1. GHG Fuel Intensity (GFI) Targets

Ships must meet annual GHG intensity targets, which become stricter over time.

• Base Target – Standard compliance level

• Direct Compliance Target – A stricter level allowing ships to earn surplus units

2. Penalties, Remedial Units, and Surplus Units

• Ships exceeding their allowed emissions must purchase Remedial Units (RUs) from the new IMO Net-Zero Fund.

• Ships outperforming their targets earn Surplus Units (SUs), which can be banked, traded, or sold.

• Revenues from RUs will support low/zero-carbon fuel adoption, capacity building, and developing nations.

3. Well-to-Wake Emissions Accounting

All targets are based on well-to-wake emissions, ensuring that fuels are evaluated across their full lifecycle.

4. Registry, Monitoring, and Verification (MRV)

Ships must maintain registry accounts, submit verified fuel data, and comply with certification and audit requirements.

Strengths and Advantages

• First global pricing mechanism – Combines intensity limits with sectoral pricing.

• Investment signals – Provides clear direction for shipowners, ports, and fuel suppliers.

• Flexibility – Credit trading offers operators flexibility during the transition.

• Holistic assessment – Lifecycle emissions accounting encourages real GHG reductions.

Limitations and Criticisms

• Ambition gap – Current targets may fall short of IMO’s 2030/2040 goals.

• Revenue shortfall – Remedial unit revenues may be insufficient to drive large-scale fuel transitions.

• Fuel choice risks – Over-reliance on biofuels could cause unintended impacts.

• Regulatory gaps – Key details on certification and lifecycle accounting are still under discussion.

• Regional overlap – Potential conflicts with EU ETS and other regional schemes.

• “Pay to pollute” risk – Some operators may choose to pay penalties rather than decarbonise.

Why the United States Is Not Participating

The United States is not currently part of the IMO Net-Zero Framework because:

• It opposes global carbon pricing and revenue redistribution.

• It favours voluntary or domestic regulatory approaches.

• Domestic political and economic concerns make participation sensitive.

• It is leveraging its absence to influence the framework’s design.

• Concerns exist about duplication with regional regimes such as the EU ETS.

IMO’s Progress Over the Past Decade

Over the last decade, the IMO has progressed from setting initial GHG strategies to implementing reporting systems, efficiency measures, and now binding net-zero regulation. The pace has accelerated significantly since 2021, with more focus on mid-term measures and fuel standards. However, the organisation remains behind scientific recommendations on urgency.

The Carbon Intensity Indicator (CII): A Short-Term Measure

The Carbon Intensity Indicator (CII), adopted in 2021 (MEPC 76) and in force since 2023, was designed as a short-term measure to improve operational efficiency. CII is expected to remain until around 2030, after which it will be replaced by more comprehensive mid-term measures.

GHG Pricing and Reward Mechanism

A central component of the Net-Zero Framework is a global carbon price:

• Ships exceeding fuel-intensity limits pay into an IMO fund.

• Ships using low-carbon fuels can earn credits and rewards.

This pricing mechanism creates economic pressure to decarbonise, something the CII lacked.

Enforcement: Flag State Responsibility

Under international maritime law, the flag state — the country where a ship is registered — is responsible for enforcing MARPOL Annex VI requirements.

• Flag states must ensure ships comply with fuel-intensity standards and emissions reporting.

• Compliance will be verified during surveys, ISM Code audits, and certificate renewals.

• Non-compliance can result in detention, withdrawal of certificates, or loss of class.

• Port State Control may also conduct inspections and report violations.

Conclusion: Preparing for the IMO Net-Zero Era

The IMO Net-Zero Framework marks a defining shift in the future of global shipping regulation. It introduces mandatory lifecycle emissions standards, financial incentives and penalties, and global compliance mechanisms — all designed to drive the sector toward net-zero by 2050.

While challenges remain — from cost gaps and policy overlaps to questions about ambition and enforcement — the direction is clear: shipping’s future will be measured, priced, and regulated by its carbon footprint.

Operators, owners, and stakeholders should begin preparing now: auditing fuel choices, understanding lifecycle emissions, and investing in low-carbon technologies. The transition is no longer theoretical — it’s already on the horizon.