Photo Credit: https://en.wikipedia.org/wiki/IMO_Net-Zero_Framework
IMO Net-Zero Framework Set for October Adoption, $100/ton CO₂ Price to Reshape Shipping by 2028
The International Maritime Organization (IMO) is preparing to formalize its Net‑Zero Framework at an extraordinary session in October 2025, marking a pivotal moment in shipping’s decarbonization journey. Drafted during MEPC‑83 in April 2025 and awaiting approval in October, the framework will enter into force sixteen months later, becoming applicable in 2028 for vessels over 5,000 gross tonnage, responsible for roughly 85 percent of global maritime CO₂ emissions.
Central to the framework is a two-tier carbon pricing mechanism. Ships whose emissions exceed a stricter target must purchase remedial units at $380 per tonne, while those surpassing a less stringent threshold pay $100 per tonne. Revenues will be directed into the IMO Net‑Zero Fund to support clean fuel deployment and aid climate‑vulnerable nations.
The impending carbon levy is anticipated to substantially influence vessel operations. Shipowners will face pressure to invest in retrofit technologies such as dual‑fuel engines, wind-assisted propulsion, and software-driven route optimisation to improve fuel efficiency and reduce emissions. The looming cost of emissions is also expected to accelerate the transition away from fossil bunker fuels toward alternatives such as LNG, green methanol, ammonia, biofuels, and hydrogen.
From a broader economic perspective, analysts from the International Energy Agency forecast stagnation in bunker fuel demand, projecting it to remain near five million barrels per day through 2030 in response to tighter environmental regulations and slower global trade growth. Shipping industry observers caution that added carbon costs, coupled with rising insurance premiums and weak economic activity, could contribute to higher freight rates and strain maritime trade.
Critics argue the framework lacks sufficient ambition, predicting only around a ten percent reduction in emissions intensity by 2030, falling short of the IMO’s target of 20–30 percent relative to 2008 levels. Some environmental groups have warned that operators might opt to pay the fees rather than invest in cleaner technology, potentially undermining decarbonisation goals.
Nevertheless, IMO Secretary‑General Arsenio Dominguez described the agreement as a milestone that delivers a binding mechanism for maritime emissions reduction and sends a clear signal for global fleet modernization.
Given that shipping transports over 80 percent of the world’s goods while accounting for approximately 3 percent of global greenhouse gas emissions, the framework represents the first sector-wide binding carbon price and a strategic step toward achieving net-zero emissions by 2050.
Should member states ratify the framework in October 2025, mandatory carbon pricing and fuel standards will apply from 2028. Shipowners will face significant pressure to retrofit vessels, shift to alternative fuels, and prepare for upward pressure on freight rates—all signaling a fundamental transformation in global shipping toward a greener future.
