- The International Maritime Organization (IMO) has agreed on a Net Zero Framework anchored by a Global Fuel Standard (GFS), aiming to significantly reduce greenhouse gas emissions from the global shipping industry.
- A mix of biofuels and scalable e-fuels will be essential for meeting near- and long-term decarbonisation targets, but policy clarity is urgently needed to incentivise the right investments.
- With implementation expected by 2027, the next phase of IMO negotiations must resolve how rewards are structured to support the uptake of zero- and near-zero emission fuels (ZNZs).
Momentum is growing behind the maritime sector’s transformation toward a zero-emission future. Building on years of groundwork to meet the IMO’s 2023 Revised GHG Strategy, the organisation reached a major milestone in April with a Net Zero Framework agreement. While implementation details remain in development, the framework signals a seismic shift in how the global shipping fleet—comprising over 30,000 ocean-going vessels—will operate and fuel up in the decades to come.
A Global Fuel Standard Sets the Foundation
At the 83rd Marine Environment Protection Committee meeting, the IMO agreed to introduce a Global Fuel Standard (GFS)—the first binding, industry-wide regulation designed to reduce the greenhouse gas (GHG) intensity of marine fuels. Key targets of the GFS include:
- 20% GHG reduction (with a stretch goal of 30%) by 2030
- 70% reduction (striving for 80%) by 2040
Net-zero emissions around 2050
The GFS mandates a gradual transition to low- and zero-emission fuels beginning in 2028. By 2040, the rule is expected to catalyse a massive shift across both the global fleet and the 200 million tonnes of fuel consumed annually by the sector.
The Fuel Mix: Biofuels Now, E-Fuels Tomorrow
In the short term, biofuels such as bio-LNG and bio-MGO are expected to play a key role, as they can be blended into existing bunkering infrastructure. However, their long-term viability is limited by scalability issues and competition from other hard-to-abate sectors like aviation and chemicals.
To meet deep decarbonisation goals, the industry will ultimately depend on scalable e-fuels—such as e-methanol and e-ammonia—produced from renewable electricity and green hydrogen. The IMO has acknowledged this need by setting a 2030 ambition of achieving at least 5% (striving for 10%) of fuel use from zero- or near-zero emission fuels. This early target is critical to commercialising these solutions ahead of widespread deployment in the 2030s and beyond.
Rewarding Zero-Emission Fuels: A Critical Missing Piece
The Net Zero Framework includes a mechanism for incentivising the uptake of ZNZs, funded by penalties collected from non-compliant ships. These funds are meant to be redistributed as rewards to shipowners using approved zero- and near-zero emission fuels.
However, without clear guidelines, the risk remains that widely available biofuels—already viable under the GFS—could claim a disproportionate share of these rewards. If this happens, it may undermine investment in truly scalable e-fuels that require the most financial support today.
A misalignment in incentives could result in missed opportunities to develop the next generation of clean shipping fuels.
The IMO’s Next Step: Getting the Incentives Right
To ensure e-fuel development receives sufficient support, the IMO must fine-tune its reward mechanisms during the ongoing negotiation process. Several options are under consideration:
- Targeted eligibility: Focus rewards exclusively on fuels derived from scalable electrolytic hydrogen.
- Lifecycle-based assessments: Evaluate fuels based on full environmental impact, accounting for their scalability and long-term sustainability.
- Tiered incentives: Provide differentiated levels of rewards based on the cost and maturity of each fuel type, ensuring a fair and efficient distribution of funds.
Although the IMO has traditionally embraced technology neutrality, this approach may limit its ability to provide a strong policy ‘push’ for transformative technologies like e-fuels.
Urgency Builds Ahead of 2027 Implementation
The formal vote to adopt April’s framework is expected in October 2025, but negotiations around fuel definitions, lifecycle assessments, and the rewards mechanism will likely continue into 2026 and 2027. With implementation targeted for end-2027, time is running short for policymakers to set the rules that will shape the industry’s fuel investments for decades.
Shipping companies, fuel producers, and infrastructure developers must start deploying capital now—decisions that will be heavily influenced by the incentives ultimately codified in the final framework. Getting these policy tools right is critical to avoid locking in suboptimal pathways and to ensure that zero-emission fuels can compete commercially on the global stage.
A Foundation Laid, Now Details Matter
The IMO’s Net Zero Framework provides a solid foundation for the shipping industry’s climate transition. But its success hinges on how clearly and fairly the implementation guidelines are written. By establishing rewards that truly reflect the challenges and benefits of e-fuel deployment, the IMO can unlock the investments needed to bring a zero-emission shipping future into view.
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Source: Global Maritime Forum
