Key takeaways
MEPC 84
The NZF remains the majority’s choice for furthering global maritime decarbonisation.
Maritime decarbonisation regulations
Current regulatory mix means the maritime industry bears additional costs and administration.
Global regulatory framework
If agreed, this will clarify investment and innovation and promote decarbonisation.
A system under pressure
Shipowners and maritime operators have faced a growing range of environmental and systemic challenges, from over 1,000 ships and 20,000 crew member stranded in the Strait of Hormuz while it remains blockaded by the US and Iran, to climate-related costs impacting transportation infrastructure – the drought in the Panama Canal in 2024, for example, is estimated to have cost global shipping US$270 billion.
Shipping interests face rising climate-related risks across infrastructure, equipment, and supply routes: low water levels are impacting inland shipping, rising sea levels threaten ports and shifting ocean conditions are impacting navigation.
In parallel, they face a rapidly shifting and increasingly fragmented regulatory landscape – navigating uncertainty not just over when a coherent global net zero framework will emerge, but whether that system will hold, and ultimately what the cost will be to them.
The Net-Zero Framework – progress interrupted
In April 2025, the shipping industry made history at the 83rd Marine Environment Protection Committee (MEPC 83) meeting, when the International Maritime Organisation (IMO) adopted the Net Zero Framework (NZF) and put a cost on carbon for the first time in support of its 2023 strategy to reduce emissions by 2030, and again by 2040 and reach net zero by 2050.
While the NZF was estimated to fall short of the IMO’s own targets, it marked the first global carbon pricing mechanism in shipping and a meaningful step towards collective climate action.
However, in October 2025 at MEPC/ES.2, at what should have been a session to sign off on the NZF with a simple yes or no, Saudi Arabia was backed by the US in forcing a procedural vote that significantly disrupted the process and blocked implementation, including by walking out of the negotiations and using direct retaliatory threats to negotiators. The US argued that the proposed carbon pricing mechanism amounted to a ‘scam tax’ on American consumers and businesses, and the interference resulted in a one-year delay of a final decision on the NZF to October 2026.
This has left shipowners and maritime operators hanging in the middle, with little guidance on their long-term investment strategy, and whether a single global framework will emerge or if the transition will be defined by a patchwork of regulations.
A rocky regulatory landscape
In the absence of a globally agreed framework, shipowners must deal with a medley of regulations as follows:
expansion of regional carbon regimes, including the EU Emissions Trading System (EU ETS) and the planned inclusion of shipping emissions within the UK ETS from 2026, requiring operators to navigate overlapping compliance requirements
growth in marine protected areas (MPAs), targeting 30% ocean coverage by 2030
emerging port-level requirements and access restrictions linked to emissions performance
These measures are developing in parallel rather than within a single global system, increasing the complexity for shipowners and creating diverging compliance pathways. What is lacking is the collective guidance from the IMO.
This leaves shipowners and operators in a difficult position which limits their ability to future proof their businesses. For example, without any clear guidance on which alternative fuels are going to be adopted, shipowners must effectively guess when ordering new builds so as to try to comply with ever increasingly stringent regulations.
As of the end of 2025, 1,942 alternative fuel capable vessels were on the orderbooks. Whilst the majority of these were LNG, many were methanol, LPG, hydrogen, methane, ammonia, biofuel and nuclear-powered vessels. This shows that, whilst willing to embrace change, shipowners and operators do not know in which basket to put their eggs and, unless there is an improvement in regulatory guidance, this situation will only continue at a cost and risk for the industry.
MEPC 84: The framework holds
One year after the initial adoption of the NZF, MEPC 84 was held in London in April 2026 where support for the original NZF seemed to be strengthening. While MEPC 84 did not resolve the divergent positions on the NZF, it confirmed that it remains on the table pending further discussions aimed at reaching consensus. Fifty-nine member states reaffirmed the NZF as the sole basis for future work – an increase of 10 member states that had previously abstained or taken no position at MEPC/ES.2.
On the other side, Liberia, Panama and Argentina submitted a new proposal which retained the fuel intensity standards of the NZF but removed the carbon price and IMO net zero fund. Japan submitted a similar proposal, which attempted to strip out the GHG pricing element. Both proposals retained the technical framework but removed the pricing mechanism, stripping out the financial signal needed to drive the transition.
Neither proposal gained sufficient support; together they were backed by only 31 member states.
Crucially, efforts to derail the NZF have so far failed, and the framework remains the foundation for future negotiations. This means that, even without the political agreement needed to implement the NZF, the technical driver of decarbonisation has continued.
Outputs from MEPC 84 included:
lifecycle fuel GHG emissions (well-to-wake) established as foundational
continued development of fuel intensity regulation and the Net Zero Fund
adoption of the North-East Atlantic Emission Control Area (ECA)
progress on lifecycle assessment methodology and onboard carbon capture certification
agreement on the scope of the Fifth IMO GHG Study
Even in the absence of an agreed framework, shipowners are not in a neutral holding position; they are already managing a system that is fragmenting and trying to operate and plan for the future, in which no clear path can be identified.
Direction of travel
At the conclusion of MEPC 84, what was clear was that most member states are still focused on progressing and recognise that there are aspects of the transition that no negotiating language can alter, most notably cumulative atmospheric CO₂ and the earth system’s response. And while key objections, including those from the US, remain, the tone was much more constructive than in October 2025.
The key story here is not the lack of agreement, but rather the failure to derail the transition.
As climate impacts translate into financial losses and geopolitical instability increases, the business case for moving away from fossil fuels has never been clearer. However, lacking a financial incentive or penalty, the burden will shift to forward-looking shipowners to take the leap alone. Without an economic mechanism, the NZF may not have the strength it needs to drive the transition at scale. The IMO is still bound by its overarching GHG reduction strategy and, without a credible pathway, it risks falling short.
Without clearer guidance, investment into green fuel production and infrastructure will be limited and the knock-on effect of that will be a limited ability to plan for the future in terms of new builds and retrofits to existing fleets. This may present opportunities for some, who are large enough and agile enough to adapt, but others may get left behind and suffer the financial consequences.
The real risk: divergence
Delivering the transition requires significant upfront investment in new fuels and technologies, alongside funding for countries already facing a disproportionate amount of climate impacts. The IMO net zero fund was intended to support both and, without it, the cost of innovation may become prohibitive.
This is already translating into real-world decisions: Pacific Basin Shipping Limited is reported to have cancelled orders for alternative-fuel dry bulk carriers, citing regulatory uncertainty, and reverted to conventional vessels. While rational in the short term, this creates long-term exposure, assets designed for 25-30 years of operation risk becoming stranded as fuel standards tighten.
In a fragmented system, the risk is increased – a vessel that is compliant in one jurisdiction may face increased costs or restrictions in another. Companies that treat uncertainty and framework delay as a reason to pause momentum may increase their exposure.
The transition is coming – are you ready?
Despite the lack of agreement, the direction of travel is clear: expect regulation on GHGs, a central reliance on fuel lifecycle emissions, and some form of economic mechanism to drive the transition.
The transition will happen. The question is whether companies move early in a fragmented system, or risk trying to absorb the cost of catching up later.
