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General
Under the Net-Zero Framework each ship will attain an annual GFI. The GHG intensity is assessed on a "well-to-wake" basis, meaning that GHG emissions are assessed from the fuel production to the end-use by a ship.
Each ship will have a target annual GFI consisting of two tiers; a base target and a stricter direct compliance target. Both the base target and the direct compliance target will be subject to annual reduction rates compared to the average GFI of international shipping in 2008 which was 93.3 grams of CO2 equivalent per megajoule (gCO2eq/MJ).
So far the IMO has specified reduction rates for the years 2028 to 2035 with remaining rates to be determined by 1 January 2032. The known reduction rates are:
Year | Base target | Direct compliance target |
2028 | 4.0% | 17.0% |
2029 | 6.0% | 19.0% |
2030 | 8.0% | 21.0% |
2031 | 12.4% | 25.4% |
2032 | 16.8% | 29.8% |
2033 | 21.2% | 34.2% |
2034 | 25.6% | 38.6% |
2035 | 30.0% | 43.0% |
At the end of each reporting period (the first originally intended to be in 2028) each ship shall determine its GFI compliance balance against its base target and its direct compliance target.
If the ship's GFI compliance balance against both targets is equal to or greater than zero, the ship will be considered in direct compliance and be eligible to receive surplus units from the IMO GFI Registry (which will be established by the IMO).
The surplus units can be sold or transferred to other ships with a compliance deficit or banked for subsequent reporting periods. However, the surplus units can only be transferred once (to avoid speculations in sales) and they will only have a validity of two years after which they will be cancelled.
If the ship's compliance balance is less than zero, the ship must achieve compliance by balancing its deficit. The compliance balancing method will depend on which compliance tier the ship falls within:
Attained GFI Score | Available compliance actions | Cost of Remedial Units |
Exceeding Direct Compliance Target | None required | No cost. Will receive Surplus Units which can be sold |
Exceeding Base Target but not meeting Direct Compliance Target | Purchase Remedial Units (lower price) | USD 100 to per ton of CO2 equivalent |
Not meeting Base Target | Use Surplus Units banked from previous reporting periods Acquire Surplus Units from other vessels Purchase Remedial Units (higher price) | USD 380 per ton of CO2 equivalent |
The pricing contributions from emissions shall be paid to the IMO Net-Zero Fund (not yet established), where revenues will be disbursed to reward low-emission ships, support research and development and supporting a just and equitable transition for developing countries.
These prices for remedial units are currently set for the reporting periods 2028 to 2030. In the original proposal, the IMO would determine a mechanism for reviewing and defining the prices for the reporting periods starting 2031 onwards by 1 January 2028.
Who must comply?
The draft proposal refers to the compliance obligations of "the ship" and does not clearly set out the responsible entity. However, the definition of "company" in the proposal refers to the ISM Company, and therefore it seems that the ISM Company would be the responsible entity. The ISM Company would often be either a bareboat charterer or technical manager who has assumed the duties and responsibilities imposed by the ISM Code from the registered owner. This is in line with the FuelEU Maritime.
However, the proposal explicitly entitles any responsible party to recover the costs (contractually) from party with operational responsibility for the vessel, in line with the polluter pays principle. This could be e.g. a time charterer.
Excluded vessel types
Certain types of ships and operations are excluded from the Net-Zero Framework. The exclusions cover ships solely engaged in voyages within waters subject to the sovereignty or jurisdiction of the state the flag of which the ship is entitled to fly. This exclusion is intended to ensure that domestic voyages are regulated by national measures, although each party is encouraged to adopt appropriate measures to ensure consistency with the framework's requirements as far as reasonable and practicable. Additionally, ships not propelled by mechanical means, platforms including FPSOs and FSUs and drilling rigs are excluded, regardless of their propulsion. Semi-submersible vessels are also excluded for now, but subject to further review.
The Net-Zero Framework is thus (unlike the FuelEU Maritime) not limited to vessel carrying cargo or passengers and will therefore apply to e.g. tugs and other offshore service vessels operating internationally.
Verification and compliance
Below is a summary of the practical steps which must be taken in respect of each ship and the yearly verification cycle that is outlined in the Net-Zero Framework, if adopted:
- Each ship must have established an account with the IMO GFI Registry (after which annual administration fees will be payable) within a given deadline.
- Prior to the first reporting period each ship must update its Ship Energy Efficiency Management Plan (SEEMP Part II) to include GFI reporting requirements (as detailed in Appendix XII to Annex VI).
- Within three months after the end of the first reporting period and by 31 March each year thereafter the ship must report to its flag state (or authorised organisation) the attained annual GFI, the target GFI and the GFI compliance balance of the ship for that reporting period.
- Within six months after the first reporting period and by 30 June after each following reporting period the flag state will verify the reported data (the verification is likely to be carried out by classification societies on behalf of the flag states).
- One month after the ship's verified data has been reported to the IMO GFI Registry the ship shall determine and record in the IMO GFI Registry its selected GFI compliance approaches (i.e. if there is a compliance deficit whether it will acquire surplus units from another ship or buy remedial units, or a combination).
- By 31 August after each reporting period the IMO GFI Registry will issue a ship account statement reflecting the relevant transactions for the ship.
- By 30 September after each reporting period the flag state (or authorised organisation) will issue a Statement of Compliance related to the ship's annual GFI. This will be valid until 30 September the following year.
Certification of fuel
The Net-Zero Framework specifies that "Fuel Lifecycle Lables" will be required for all fuels in which the GHG intensity of a fuel shall be documented. The Fuel Lifecycle Lables for fuel will be needed to calculate a ship's annual GFI. The Fuel Lifecycle Lables will be certified by a recognised "Sustainable Fuels Certification Scheme" and by 1 March 2027 the IMO will publish a list of recognised Sustainable Fuels Certification Schemes. This is an area which requires a lot of further detailing which will be contained in guidelines to be developed by the IMO.
Sanctions and enforcement
The Net-Zero Framework does not currently include specific measures on sanctions or enforcement. It is clear that it will be the flag state that issues the Statement of Compliance and as such it will be the flag state that will be responsible for verifying that ships registered with it comply with the requirements.
Status: In progress
The Net-Zero Framework failed to be formally adopted in October 2025, and the vote on adoption has been postponed by a year. The future of the proposal is uncertain at this time.
Relation to other initiatives and regulations
It is not clear how the Net-Zero Framework will interact with EU'sFuelEU Maritime regulations and EU's Emission Trading System (EU ETS) for shipping which bear some similarities, but also significant differences. In this respect, the EU Commission has confirmed that it will "assess the new Net-Zero Framework to see how it interacts with current EU maritime related regulations, maintaining environmental integrity while avoiding significant double burden".
Participants
Signatories to MARPOL Annex VI.
Thommessen's comments
The Net-Zero Framework has been negotiated for close to a decade and the approval of the framework marked an ambitious goal by the IMO in achieving net-zero greenhouse gas emission in shipping by 2050 as stipulated in IMO's 2023 Strategy on the Reduction of Greenhouse Gas ("GHG") Emissions from Ships.
The Net-Zero Framework would be set out in a new Chapter 5 to Annex VI to the International Convention for the Prevention of Pollution from Ships, 1973 (MARPOL). Annex VI currently has 108 signatory parties covering 97% of the world's merchant fleet by gross tonnage. Adoption of the amendments to Annex VI would require acceptance by two-thirds of the signatory parties to Annex IV representing at least 50% of the gross tonnage of the world’s merchant fleet.
If adopted the Net-Zero Framework will require all ships above 5,000 gross tonnage that are flying the flag of a signatory state or sailing in the exclusive economic zone of a signatory state to comply with two "functional requirements", which in practice will mean that the Net-Zero Framework will have worldwide application for ships engaged in international trade.
The first functional requirement entails that ships must reduce, over time, their GHG fuel intensity. The second functional requirement entails that ships that emit above certain annual gas fuel intensity ("GFI") thresholds will have to acquire remedial units (RU) to balance its compliance deficit. On the other hand, those that exceed the threshold will receive surplus units (SU) that may be sold to ships that have not met the target. Unlike the FuelEU Maritime, there is no requirement to enter into pools to achieve compliance balance, and SUs may be sold to any other shipping operator. Furthermore, ships using zero or near-zero GHG technologies will be eligible for financial rewards.
The legal framework is complex and there are still several outstanding issues with how the regulation would work in practice. With the vote on adoption having been postponed by a year, the draft regulation could be further refined and details set before the next vote. However, what is clear already now is that the Net-Zero Framework will have a significant economic impact on the industry and that sufficient contractual regulations will be required in charterparties, management agreements and sale and purchase agreements to regulate responsibility for compliance and costs. We expect BIMCO to issue additional IMO Net-Zero Framework clauses if the regulation is adopted.