Between the Devil and the Deep Blue Sea

An article written by John Butler, Business Stream Director - Marine Services

This is potentially one of the most transformative weeks for the future of international shipping. At the International Maritime Organization, (IMO), it is fully expected that the Net Zero Framework, (NZF), will be ratified this week. If confirmed this will be the single most disruptive event to happen in shipping since the development of the marine diesel engine.

So, what makes the NZF so important and why should people in the maritime sector sit up and take notice?

Well before we discuss “what” the NZF addresses, it is necessary to discuss “who” is responsible for its implementation. The NZF will be instigated by the most powerful entity capable of enacting a multilateral emissions levy on global shipping, the IMO. If executed correctly the NZF will in effect be a global maritime carbon tax. This is not just another regulatory measure - it’s a landmark step that effectively creates the world’s first global carbon-pricing market for a full sector. In this instance the sector is maritime shipping.

If formally adopted in Oct 2025, the framework will be legally binding by January 2028 and will be mandatory for all large ocean-going ships over 5000 GWT. The IMO, Marine Environment Protection Committee, (MEPC 83) will take the draft legal text and have it incorporated into Annex VI, which focuses on the prevention of air pollution from ships, of the MARPOL convention.

Taking a step back, it is important to assess how this new framework will be implemented and what the short-, medium- and long-term impacts might be on the shipping industry?

The enforcement of the NZF will be multi-layered and require national authorities such as flag States, Port State Control, Recognized Organisations, (ROs) as well as IMO Member state audits. All these parties will have overlapping enforcement roles to ensure adherence to the NFZ. An effective Venn diagram of compliance that ensures no omissions. The IMO are responsible for developing and adopting the regulations that govern the shipping industry; however, it will be the national authorities that are responsible for enforcing the IMO regulations.

The way the NZF is enforced plays an essential role in the implementation and acceptance of credible regulation. Consistent enforcement helps maintain market fairness and protects investments that comply with established standards.

Where the rubber hits the road or where the keel hits the sea…

The global shipping industry operates under a set of legally binding conventions, such as Safety of Life at Sea, (SOLAS) and MARPOL, (Prevention of Pollution from Shipping), which govern maritime safety, environmental protection and the welfare of seafarers. The NZF will be incorporated into Annex VI of MARPOL.

Under NZF Regulation 37, ships will be required to report the following to their flag state or a designated RO:

• Attained annual Green House Gas Fuel Intensity (GFI)
• GFI Compliance balance
• Target annual GFI &
• The underlying date used to calculate the above items

Ultimately it will be the flag State who is responsible for the following:

• Verifying that the vessel’s Ship Energy Efficiency Management Plan (SEEMP) is compliant with the NZF requirements
• Verifying compliance of the reported GFI data
• Verifying the attained annual GFI
• Submitting verified data to the IMO GFI registry
• Issuing Statements of Compliance and verifying fee payment
• Assessing a ship’s eligibility for rewards based on the IMO GFI registry

The GFI measures how much greenhouse gas is emitted for each unit of energy used by a ship. The reporting of GFI’s is essential as levy’s will be imposed on vessel owners operating above the expected GFI threshold. For reference the GFI threshold is 93.3 gCO₂eq/Mj, based on industry average in 2008.

As mentioned earlier, once adopted, the NZF starts to follow the new rules from January 2028. As such vessel owners and operators will now start assessing their fleet for compliance to the NZF and what impact the proposed threshold will have on their operational costs.

Conversely, vessel owners with zero or near zero GHG fuels or technologies will be financially rewarded. Introducing a payment system where cleaner ships are rewarded and higher-emitting ships must pay into a fund that supports greener technology and developing countries. Within the regulations there will be 2-Tier carbon credits available “remedial units” and “surplus units”, ship owners can trade units or credits to achieve compliance with the IMO NZF.

In simple terms, Remedial Credits:

• Represent emission reductions made to correct a shortfall.
• Are utilised when a ship emits more than allowed under its decarbonization target.
• Typically, must be purchased or generated through verified emissions reduction projects.

Similarly, Surplus Credits:

• Are earned when a ship emits less than its target GFI.
• Can be banked for future use or sold to others who need remedial credits.
• Purpose is to encourage early or extra action toward decarbonization.

In effect vessel owners will have the opportunity to futureproof their fleet by adopting new and or alternative technologies. These marine innovations will provide a payback mechanism that effectively accelerates the return on investment for these technologies. Furthermore, vessel owners will have the opportunity to apply for funding to modernise their fleet to reduce fuel burn or use alternative fuels to minimise or eliminate GHG emissions.

Global Maritime is seeing an increased shift in marine decarbonisation, driven by regulatory develops such as the NZF, as well as an increased focus on maritime sustainability, with vessel owners looking to futureproof their fleets with more sustainable solutions.

In this space, we appreciate the responsibility marine consultancies have in supporting clients through this transition. At Global Maritime, we have developed digital in-house tools to support the environmental management - providing assured MARPOL compliance and establishing a baseline for the environmental compliance of marine assets. The purpose of these solutions is not only to identify environmental gaps but to provide the feedback on areas of improvement that helps reduce operating costs, minimises environmental impact and verifies compliance.

As a business our opportunity is to help our clients navigate their way to a more sustainable and financially robust operating model for their fleet.

There is also an increased trend in the use of alternative marine fuels in shipping. The three main alternative fuels that are continually highlighted are Green Hydrogen, Green Methanol and Green Ammonia. Although there is often heated debate over which fuel provides the best solution for the maritime sector, it is important to recognise that both methanol and ammonia are derivatives of hydrogen. So regardless of your loyalty, one fuel type or another, the base source is Green Hydrogen.

It is also important to recognize that when it comes to alternative fuels there is no “silver bullet”. Alternative fuels will only work when partnered with fuel efficiency. Managing your vessel efficiency can delivered through digital solutions to optimise your route selection, digital port operations which facilitates “just in time” management of vessel movements, thus decreasing fuel burn. Finally, propulsion technologies such as rotate sails for wind assist are becoming more commonplace. By utilising these technologies, we are able to optimise operations, increasing fuel efficiency paving the way for alternative fuels such as Green Hydrogen or its derivatives.

Through this article I have looked to discuss how the international shipping industry is on the brink of a major transformation. The IMO is set to approve the Net Zero Framework, a global maritime masterplan that aims to make shipping carbon neutral by 2050. This will be the most significant change in the industry in decades. The NZF will apply to ships 5,000 gross weight tons and over, setting strict rules on greenhouse gas emissions and fuel efficiency. Ships that pollute more will pay financial penalties, while cleaner ships will earn credits they can trade or sell.

The framework’s success depends on fair and consistent enforcement by both international and national authorities. It builds on existing maritime safety and environmental agreements like MARPOL and UNCLOS, ensuring global cooperation. To meet these new standards, shipowners will need to modernize fleets, invest in cleaner fuels such as green hydrogen and adopt smart technologies to improve efficiency and reduce fuel use.

However, sustainability isn’t just about utilising new fuels - it’s about leveraging digital tools and smarter planning to reduce waste and emissions. For Global Maritime, this transition represents both a responsibility and an opportunity to empower clients to become greener and more efficient. The NZF marks a significant turning point, steering the global shipping toward a cleaner, fairer, and more sustainable future.