IMO fails to reach agreement on Net-Zero Framework

The International Maritime Organization (IMO) concluded its ISWG-GHG 22 session in London without reaching a final agreement on the Net-Zero Framework (NZF). While a definitive regulatory text was not adopted, negotiations between September 1 and 4 showed some convergence, particularly regarding a Greenhouse Gas Intensity (GFI) trajectory.

Most states appear to be moving toward adopting a single limit for the GFI rather than the two limits originally proposed. This regulation is expected to be more flexible in its early years, with rules potentially tightening after five to ten years. A review clause is also being considered to adjust the GFI trajectory based on the actual market availability of alternative fuels.

A major point of contention remains the proposed economic mechanism. There is significant uncertainty regarding how funds would be collected and where they would be allocated. While initial studies suggested the NZF could collect $27 billion annually, rising to $180 billion by 2038, recent modifications might reduce initial annual collections to between $10 billion and $15 billion. The United States has expressed disagreement with the existence of such a mechanism, and several other nations have questioned whether the IMO has the capacity to manage such large volumes of capital.