- DGS Releases Compliance Framework for IMO’s GHG Fuel Intensity Rules.
- Indian Maritime Stakeholders Urged to Prepare for 2027 GFI Mandate.
- Guidance Note Outlines India’s Path to IMO Net-Zero Goals by 2050.
In line with India’s active role at the International Maritime Organisation (IMO), the Directorate General of Shipping (DGS) has issued a detailed Guidance Note entitled Guide to the IMO Net-Zero Framework – Implications for India’s Maritime Sector. This comes after the Greenhouse Gas Fuel Intensity (GFI)-based compliance mechanism being approved at MEPC 83 under MARPOL Annexe VI, reports DG Shipping.
What is the IMO’s role in controlling greenhouse gas emissions from ships?
The International Maritime Organisation (IMO) is the United Nations specialised agency for international shipping’s safety, security, and environmental performance. The IMO has implemented various technical and operational measures since 2011, such as the Energy Efficiency Design Index (EEDI), Ship Energy Efficiency Management Plan (SEEMP), and the Carbon Intensity Indicator (CII). The IMO’s approval of Mid-Term Measures that include a technical component and an economic component, such as the Global Fuel Standard (GFS) constitutes the third phase of action aimed at phased reduction of GHG intensity of fuels and economic incentives for speeding up decarbonization.
How did the IMO process develop in adopting the GFI measure?
The approval of the IMO Net-Zero Framework was the culmination of more than 15 years of IMO deliberations, starting with the GHG discussions in 2008. The Initial GHG Strategy of 2018 requested potential development of MBM by 2030, which was reconfirmed and updated in the 2023 Revised Strategy. The new Strategy said that the committee should endorse the Mid-Term Measure of the Global Fuel Standard and the GHG pricing mechanism by 2025. There were several rounds of Intersessional Working Group meetings and three MEPC sessions before consensus on the two-tier GFI proposal. India’s pro-active participation helped form a balanced and equitable final result.
What is the GFI-based measure taken by the IMO, and what is it intended to accomplish?
The Greenhouse Gas Fuel Intensity (GFI) measure, adopted at MEPC 83 in April 2025, is a GHG reduction mechanism that obligates ships over 5,000 GT on international voyages to gradually lower the GHG intensity of fuels consumed while the integrated GHG pricing mechanism supports energy transition of international shipping while achieving a level playing field and a just and equitable transition. It is consistent with the IMO’s Revised GHG Strategy (2023), which aims for net-zero emissions from international shipping by or in about 2050. It seeks to encourage decarbonization through fuel efficiency, uptake of green fuels, and climate-equitable cost sharing.
What is the GFI in simple terms?
The GHG Fuel Intensity (GFI) is a parameter that indicates the level of carbon dioxide (CO₂) equivalent emissions per energy unit (grams of CO₂ equivalent per megajoule) of fuel used by marine ships. Progressively, progressive GFI limitations have been defined by the IMO, and marine ships are bound to remain below or above those limits or endure compliance costs. These fuels have relatively lower GFI values that are normally much lower than those of conventional fuels and are thus in favour under the new regime.
What were the three significant proposals put forward at the IMO for market-based measures?
Three significant proposals were put on the table at the IMO during the lead-up to MEPC 83 to control ships’ GHG emissions through a GHG pricing system. The first was the European Union’s flat carbon charge proposal, with a uniform charge of USD 100 per tonne of emitted CO₂ solely to establish a price signal and without a distributive mechanism in order to redistribute equitably. The second was the SIDS (Small Island Developing States) proposal, which proposed a larger flat levy of USD 150 per tonne of CO₂ with revenue redistribution going even beyond the maritime industry, especially to assist climate-vulnerable nations. The third was the India-Singapore Two-Tier GFI-based proposal, which presented a performance-linked approach with remedial unit pricing at USD 100 (Tier 1) and USD 380 (Tier 2), and contained provisions for equitable revenue redistribution and incentives for low-emission ships. India endorsed this model due to its balanced strategy, fair cost allocation, and accordance with developing country priorities since it was the only one that limited compliance costs, synchronised with green fuel incentives, circumvented flat taxes, and provided climate equity.
How does the two-tier GFI compliance mechanism function?
Ships are assessed on an annual basis (calendar year) on the basis of their GFI performance relative to a reference trajectory. Those with excessive intensity have to purchase Remedial Units at:
- Tier 1: USD 100 per tonne of CO₂ equivalent for light non-compliance
- Tier 2: USD 380 per tonne of CO₂ equivalent for substantial non-compliance.
Vessels that exceed the required performance can produce Surplus Units, which are marketable or can receive rewards under the IMO incentive program.
When will the GFI measurement become binding, and when is the amendment schedule?
The GFI regulation will come into force in March 2027, pending the IMO amendment procedure under MARPOL Annexe VI:
- Adopted for circulation at MEPC 83 (April 2025)
- To be adopted formally at an Extraordinary MEPC Session in October 2025
- A 10-month deemed acceptance period, with entry into force 6 months thereafter, unless objected to formally by one-third of parties accounting for 50% of world tonnage.
- Anticipated to enter into force by March 2027.
In what ways is the GFI methodology distinct from a conventional levy?
In contrast to a flat carbon charge, where all tonnes of CO₂ emitted by a ship pay the same fee irrespective of ship performance, the GFI approach is calculated on the actual GHG intensity of emissions from the fuels burned by a ship. It is a performance-linked system where non-compliant ships pay, but only through buying remedial units. This provides flexibility, encourages innovation, and prevents effective ships and early adopters of green fuel from being penalised, making it more fair for developing nations such as India.
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Source: DG Shipping
