IMO Adopts Historic New Agreement on Global Shipping Net-Zero Emissions

IMO Adopts Historic New Agreement on Global Shipping Net-Zero Emissions

On April 11, the International Maritime Organization (IMO) approved draft amendments to Annex VI of the International Convention for the Prevention of Pollution from Ships (MARPOL), mandating the implementation of the IMO Net-Zero Framework. This marks the world's first framework that combines mandatory emission limits for an entire industry sector with greenhouse gas pricing. To date, 108 contracting parties have joined the convention, representing approximately 97% of the global merchant fleet by tonnage!

What are the key elements of this new convention? And how should the industry choose between LNG and methanol under these new rules? Let’s dive in with Zhenyi’s analysis.

Core Objectives of the New Framework

The framework’s primary goal is to achieve net-zero emissions for global shipping by 2050. To accomplish this, a "dual-track" approach has been adopted:

1，Gradually tightening global fuel GHG intensity standards to control carbon emissions at the source.

2，Implementing a carbon pricing mechanism, where ships exceeding emission limits will face fees to curb excessive emissions.

Currently, the rules primarily target large oceangoing vessels over 5,000 gross tons, which account for about 85% of global maritime CO₂ emissions.

Two-Tier Compliance Mechanism (Proposed)

Starting in 2028, annual emission reduction targets will be set at two levels:

"Incentive" Target: Exceeding this target will qualify for rewards, while falling short incurs only a minor penalty.

"Baseline" Target: Failure to meet this stricter target will result in significantly higher penalties.

These measures are scheduled for formal submission at the IMO meeting in October this year. If approved, they are expected to take effect in 2027, allowing a two-year transition period for stakeholders to adjust operations and invest in alternative fuels and new technologies.

Global Voting Outcome

63 countries voted in favor, including China, EU members, Brazil, the UK, Canada, India, and Japan.

16 countries opposed, led by oil-producing nations such as Saudi Arabia, Qatar, the UAE, and Russia.

25 countries abstained, including several Pacific island nations.

The U.S. did not attend but submitted a letter opposing the mechanism and warning of potential retaliatory measures if fees are enforced.

LNG vs. Methanol: Which Will Prevail Under the New Rules?

The debate over LNG vs. methanol has been intense, and the new regulations add fuel to the discussion. So, which one comes out on top?

Our conclusion: Despite regulatory changes, the overall trend remains.

Short-term: LNG remains the more economically viable transition fuel under current IMO rules.

Long-term: With carbon pricing driving change, green methanol holds unlimited potential.