Readout from UCL Shipping and Oceans Research group shows IMO’s Intersessional working group on GHGs has made good progress on a range of important debates and guidelines, that all relate to the implementation of the IMO’s Net Zero Framework (NZF). If adopted, these guidelines provide the finer detail important for both the industry and member states to understand how the various components of the framework will operate in practice.
Relative to the implementation detail that was available in October 2025 at the MEPC Extraordinary Session meeting, at which a decision was made to adjourn/defer the adoption decision for 12 months, there is now a much better clarity of how the NZF could operationalise. This means there is now more mature evidence base from which to assess how the NZF will create energy transition business case for shipowners and the shipping industry’s value chain, and how it may create impacts and opportunities for IMO member states.
Dr Tristan Smith, Professor of Energy and Transport at UCL Shipping and Oceans Research Group said: “Given the outcome of MEPC.ES2 in October 2025, many have assumed that the NZF had no future and the IMO faced a long delay and a major redesign of this key policy. This meeting’s cooperation, outputs and political landscape challenges that assumption, and suggests that renewed efforts to find a way forwards inclusive of GHG pricing are important to avoid deadlock, as well as to ensure delivery on IMO’s revised strategy commitments.”
The meeting saw positive engagement from a large number of countries, including developing countries, SIDS and LDCs. Of those that took the floor, the majority of the countries (39) positively engaged, engaged on topics linked to the collection and distribution of revenue, such as the fuel rewards and/or the fund. In particular, the majority (16) of countries which voted in favour of the adjournment or abstained in October, and participated to the discussion this week, actively engaged on the discussions on the reward and/or the fund. Only a small minority (4) explicitly refused to engage in the discussion. This suggests that many of those who supported the adjournment view the economic element of the NZF, and in particular the collection and distribution of the fund, as an important part of the NZF.
Dr Annika Frosch, Research Fellow at UCL Shipping and Oceans Research Group said: “Strong and continued engagement on the Net Zero Fund underscores broad interest in an economic element within the IMO’s Net Zero Framework, with many countries pushing for accelerated and intersessional work, an indication that such mechanisms remain central.”
With regard to supporting shipping’s energy transition, the meeting agreed not to take the multiplier concept further at this time, but as further evidence of broad member support for GHG pricing, that the support for ZNZ should come from the ZNZ Reward Mechanism and the IMO’s Net Zero Fund. There was approximately equal support for the IMO-determined rate (a flat rate reward) as the sole mechanism, and a group of member states who supported further considering either the reverse auction on its own or in combination with the IMO-determined rate. Both mechanisms have therefore been included in a draft of guidelines for further work.
Dr Marie Fricaudet, Senior Research Fellow at UCL Shipping & Oceans Research Group said: “There remain key questions for further work, on how IMO’s policy could incentivise shipping’s energy transition, particularly how the reward mechanism might support the early adopters – crucial as the pre-cursors to shipping’s mass market transition.”
Source: UCL Energy Institute
