- US Threatens Economic Penalties Against Framework Supporters.
- EU Reaffirms Backing, Highlights Global Level Playing Field.
- Past Vote Shows Strong EU and Asia Support, US Previously Abstained.
Member states of the International Maritime Organisation (IMO) are gearing up for a crucial vote on new decarbonization rules for maritime energy, scheduled for October 14–17, 2025, during a special session of the Marine Environment Protection Committee (MEPC). This vote is anticipated to be quite contentious, with the EU firmly supporting the framework while the US stands in opposition, and opinions within the industry are notably mixed, reports S&P Global.
US Issues Economic Penalties Warning
The US has issued a warning that countries backing the European-led framework might face consequences such as port fees, bans, visa restrictions, sanctions, or penalties on US government contracts.
“The United States will be moving to levy these remedies against nations that sponsor this European-led neocolonial export of global climate regulations,” said Secretary of State Marco Rubio, Secretary of Energy Chris Wright, and Secretary of Transportation Sean Duffy on Oct. 10. “We will fight hard to protect our economic interests by imposing costs on countries if they support the NZF.”
European Support for Decarbonization
In response, the European Commission reaffirmed its backing for the Net-Zero Framework on Oct. 12, highlighting its potential to decarbonise shipping and create a global level playing field. “The EU views the Net-Zero Framework as a significant milestone and calls for its adoption at IMO,” said Brussels. “After the adoption, the European Commission will review the relevant EU regulations in place.”
The EU has already expanded its Emissions Trading System (ETS) to include shipping starting in 2024 and has set a cap on greenhouse gas emissions intensity for marine energy in EU-related trades, which will kick in from January 2025.
Past Vote and Current Position
This framework received approval back in April 2025 with a vote of 63-16, gaining support from EU nations, China, Japan, Brazil, the UK, Singapore, and Panama, while facing opposition from some oil producers in the Middle East. The US, which previously abstained, is now set to join in with an interagency delegation. For the adoption to go through, a two-thirds majority of Annexe VI signatories is needed, representing at least half of the global fleet by gross tonnage.
“A large majority, including all EU member states, would back the rules again in the coming days,” said Fotini Ioannidou, director of waterborne transport at the European Commission.
Industry Views on Fuel Economics
Several shipping and bunker industry associations support the framework, citing the benefits of uniform rules: “Only global rules will decarbonise a global industry,” said the Asian Shipowners’ Association, European Community Shipowners’ Association, International Association of Ports and Harbours, International Bunker Industry Association, International Transport Workers’ Federation, International Chamber of Shipping, and World Shipping Council. “Without the Framework, shipping would risk a growing patchwork of unilateral regulations, increasing costs without effectively contributing to decarbonization.”
The IMO rules are designed to narrow the price gap between fossil fuels and sustainable marine fuels by imposing a cost on greenhouse gas emissions from marine energy starting in 2028. However, critics, including those from the US, are concerned about the potential for inflationary effects.
Recent bunker fuel prices in Singapore reveal the stark differences in costs:
- 0.5% sulfur fuel oil: $483.73/mt
- LNG: $579.17/mt
- B24 biobunker: $691.92/mt
- 100% sustainable methanol: $1,897.44/mt
Contentious Debates Among Shipping Companies
Several prominent oil shipping companies, such as Frontline and Maran Tankers, have expressed concerns that this framework might force a sudden shift towards unproven decarbonization technologies. Classification societies like DNV and the American Bureau of Shipping have criticised the regulation for penalising LNG after 2030 and for not providing a clear path to decarbonization. On the flip side, 26 green fuel producers, including European Energy, MOEVE, and Liquid Winds, are calling on IMO member states to embrace the framework and offer incentives for the use of e-fuels.
“Without immediate and unambiguous signals for the production and uptake of e-fuels, the global fleet risks ‘locking in’ short-term fuel pathways that undermine both ambition and cost-effectiveness over time,” the companies said on Oct. 13.
Market Impact and Growth Potential
According to Boston Consulting Group, the low-carbon marine fuel market could exceed $10 billion by 2028, rising beyond $100 billion by 2035 with framework implementation.
“These regulations will transform the competitive landscape not just for shippers but for developers of low-carbon fuels and players looking to invest in them,” BCG noted.
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Source: S&P Global
