With MEPC 84 still a month away, early submissions from IMO member states suggest an emerging shift in how global shipping decarbonisation could be regulated, with increasing emphasis on political feasibility, market readiness and technology neutrality. The ambitious Net-Zero Framework did not pass back in October 2025. While global action on shipping emissions remains broadly supported, several governments are signalling that the current draft Net-Zero Framework is unlikely to secure consensus in its present form.
Early signals ahead of MEPC 84
A series of pre-session submissions indicate that negotiations are moving toward a more pragmatic regulatory model. The immediate backdrop is the failure to adopt the package at MEPC/ES.2 in October 2025. The Algeria (MEPC 84/7/30) led group of member states argues that the current draft does not enjoy the consensus needed for effective implementation, while Japan (MEPC 84/7/49) says the one-year adjournment should be used to identify options that can bridge the gap between competing positions. Argentina, Liberia and Panama (MEPC 84/7/38) likewise point to objections over compliance costs, administrative burden and the proposed IMO fund.
Emerging trend: from pricing-led to market-realistic regulation
1. Reduced support for fixed global pricing mechanisms
Several countries are pushing back against centrally administered pricing tools, including the proposed IMO Net-Zero Fund, citing concerns over political acceptability and institutional scope.
A central dividing line is the treatment of pricing. Japan says some states objected to what they regarded as elements of a global carbon tax and proposes an option that would allow ships to avoid mandatory payments to an IMO fund by relying instead on market balancing through surplus units. The Algeria-led submission goes further, arguing that the framework should not include centrally determined market elements such as fixed or administered carbon prices, and warning that sudden or unclear financial burdens will not command durable support.
2. Reinforcement of technology neutrality
Another clear theme is technology neutrality. The papers argue that the framework should not effectively pre-select winners before fuel supply chains, bunkering infrastructure and lifecycle accounting are mature enough to support that choice. The Algeria-led paper calls for a comprehensive and technology-agnostic approach, while Japan says all fuel types, including LNG, should be assessed on a technology-neutral basis using scientific evidence and updated well-to-wake treatment.
3. Focus on implementation realism
On a related note, the Argentina-Liberia-Panama submission gives that logic a more structured form. It proposes that the Global Fuel Intensity trajectory should be tied to demonstrated affordability, availability and scalability of low-carbon marine fuels, rather than being driven only by fixed regulatory assumptions. That matters because the commercial challenge is not just about one year’s compliance cost. It is about the total cost of ship ownership over the life of the asset.
That point is becoming harder to ignore because ships are long-lived assets. UNCTAD reported that as of early 2023 the average ship age was 22.2 years, and more than half of the global fleet was older than 15 years. At the same time, 98.8% of the fleet was still running on fossil fuels. In other words, most of the fleet that will be exposed to the next phase of IMO regulation is either already in service or being financed now.
Industry modelling supports the view that lifetime economics can look very different from headline compliance costs. DNV’s commercial case study for a 5,500 TEU containership found that a dual-fuel methanol-fuelled vessel had a total cost of ownership of about $494 million over 25 years, with a scenario range of $469 million to $518 million. Those figures matter because they suggest fuel flexibility and regulatory optionality may add relatively little to lifetime ownership cost relative to total vessel spend. They also highlight why owners resist frameworks that front-load risk. In DNV’s analysis, fuel costs rise from roughly 25% to 40% of annual costs today to as much as 60% during the financing period, and up to 90% thereafter.
The point is simple. A framework may look workable on annual compliance terms but still erode asset value over a ship’s life if it forces early replacement, limits fuel options before infrastructure is ready, or creates cost volatility that owners and lenders cannot price. That risk is especially relevant in tramp, bulk and tanker markets, where vessels trade globally and operate across long asset lives. UNCTAD has already warned that shipping faces multibillion-dollar transition investments amid continued uncertainty over future fuels.
A reframing of the IMO approach
Taken together, these submissions suggest a potential reframing of the IMO’s decarbonisation model:
- from top-down, price-driven regulation
- toward bottom-up, market-responsive pathways
The alternative model emphasises:
- gradual, predictable decarbonisation trajectories
- flexibility through trading and pooling mechanisms
- alignment with real-world fuel supply and infrastructure
The Argentina–Liberia–Panama proposal, for example, introduces a 30-year linear fuel intensity pathway anchored in commercially viable fuels, combined with periodic reviews tied to market evolution.
What remains uncertain
At this stage, there is no agreed direction. Key open questions include:
- whether any form of global carbon pricing will remain in the framework
- how lifecycle emissions accounting will be standardised
- the final ambition level of fuel intensity targets
- how compliance mechanisms will be structured
For fuel markets, the divide is clear. A more market-linked, technology-neutral framework would preserve optionality for LNG, biofuels, methanol-ready vessels and retrofit pathways for longer. A stricter pricing-led model would strengthen long-term signals for zero-emission fuels but shift more transition cost and risk into the early years of ship ownership.
It is still early, with MEPC 84 about a month away. But the pre-session papers suggest the debate is shifting. Global action remains the goal, yet any final package may need to work not only as an emissions regime, but as a credible ship investment framework. Without properly accounting for lifetime ownership costs, political agreement and practical implementation may remain difficult.
