Global Green Shipping Plan Left Floating

The finalisation of the United Nations’ (U.N.) International Maritime Organization (IMO) Net-zero Framework (NZF) is said to hold great promise for climate action in the form of green shipping, but there is great uncertainty surrounding its future. What was supposed to be a step towards establishing a global legally binding framework to decarbonise global shipping has been halted by the threat of tariffs and other punitive measures by the United States (U.S.) on countries that support the undertaking. Notably, the U.S. was not alone in thwarting IMO members’ shipping carbon reduction efforts, as Saudi Arabia, a leading petroleum power, proposed the motion to delay voting on the adoption of the agreement for a year, and many countries backtracked on their initial support. The balancing act involved in global climate efforts, in this case, attempts at decarbonising shipping, and economic interests, is always one worth exploring, as interests matter and this is demonstrated by the results of this initiative. In this article, I explore the interests and the costs of this framework.

Unpacking the IMO Net-zero Framework

The IMO Net-zero Framework was approved for circulation by the Marine Environment Protection Committee (MEPC) at its Eighty-Third session in April 2025 to set international standards geared towards curbing greenhouse gas (GHG) emissions in the shipping sector. Poised to form part of the International Convention for the Prevention of Pollution from Ships (MARPOL), Annex VI, the draft legal text was circulated and due for adoption in October 2025, but it stalled due to resistance by concerned members. Over 100 member states gathered in London to vote on the draft document, with 57 countries supporting adjournment, 49 opposing it, and 21 abstaining.

At the centre of its opposition are the two key elements of the framework, namely, a global fuel standard and an economic measure geared towards reducing carbon emissions from ships. Essentially, the fuel standard sets the rules to get vessels, over time, to minimise the GHG emissions per unit of energy used, and it considers emissions through the entire life-cycle of fuel from production to consumption. The economic measure refers to a two-tiered pollution system with annually increasing GHG Fuel Intensity (GFI) targets, which prescribe maximum limits on GHG emissions per unit for large vessels over 5,000 gross tonnage which emit 85% of carbon dioxide, the most prevalent anthropogenic (man-made) greenhouse gas. This mechanism is based on a carbon credits trading scheme, where a set number of credits is allocated to ships. Ships emitting above their GFI thresholds (exceeding their credits) will be required to purchase remedial units to cover the excess.

In simple terms, think of it as a bank account; in this case, the ship has a certain amount of money (GHG emission limit) to participate in shipping, and if the ship goes over, it would be synonymous with having an overdrawn account and would accrue a penalty. In this case, the shipping company pays the penalty in the form of remedial units to offset going beyond the limit. Conversely, vessels with lower emissions benefit financially through a rewards system, earning credits, with the option of selling their credits to vessels with high emissions. Consequently, ships that exceed set limits have to pay, while those that are net zero or near net zero benefit.

Under this framework, the money paid for exceeding limits would go into the IMO-Net Zero Fund. This fund is then used to reward ships with low emissions, support member states’ NZF transition and any other associated initiatives. Employing such measures is believed to be a force for driving clean shipping, fostering technological innovation in sustainable shipping and facilitating capacity building (much like the Caribbean Shipping Lanes Project). This sounds quite doable; pay when you pollute in excess. However, states like the U.S. are concerned with the costs for paying ‘the cost’.

Costs for Paying ‘the cost’

While NZF proponents see the merit of the proposed system in fostering GHG emissions reductions, U.S. President Donald Trump views it as a “Global Green New Scam Tax”. The U.S. Department of State dubbed what, if adopted, could have been the world’s first global environmental tax an injurious initiative. Washington suggests that the NZF could have an adverse trickle-down effect on the American people and the global economy through increased shipping costs. As a result, the U.S. threatened retaliatory measures against states voting in favour of the draft text in the form of visa restrictions and sanctions on state officials, blocking and increasing port fees on vessels from such states, and commercial penalties. What is noteworthy is that Caribbean states, Antigua and Barbuda and the Bahamas, opted to abstain citing transitional concerns, notwithstanding their advocacy for climate change. Also interesting is that China, a trading powerhouse, initially supported the plan but then changed its position.

To say that the concerns about the potential increases in energy and consumer prices are illegitimate would be disingenuous, as this has been a primary concern for many. Based on calculations from the Center on Global Energy Policy (CGEP) at Columbia University’s School of International and Public Affairs, a vessel utilising the IMO’s recommended environmentally friendly very low sulfur fuel could face an additional $1.5 million in annual operating expenses. There is a high likelihood that the costs could be passed on to consumers in the form of higher merchandise prices.  This will ultimately affect import-dependent countries such as those in the Caribbean. Moreover, the ability of firms to acquire vessels with green technology or upgrade them to support the green shipping transition is also a consideration. Then there are petroleum states, such as Saudi Arabia and increasingly Guyana, which stand to be adversely affected as their oil sectors are a central part of their economies. However, while transition costs are an essential consideration, so are the real and lived experiences of the effects of climate change.  

The Climate Cost

Economists argue that there are opportunity costs for choices made, and the same can be applied in balancing the priorities for economic growth with the environment. Although Caribbean states have not historically contributed to climate change, for all of them, the effects are real and lived experiences. Faced with supersonic monster hurricanes, like hurricane Melissa that ravaged Caribbean countries in October 2025, rising sea levels, droughts and increased temperatures, coastal erosion, progress in climate change adaptation is a matter of lives and livelihood. At the same time, many Caribbean countries are import-reliant economies and the effects of the NZF can appear daunting.

Power politics always seem to stymy adaptation progress, from the 1982 UN Law of the Sea, to the 2015 Paris Agreement, and now the pause in the IMO NZF. In this matter, the concerns raised have some legitimacy. IMO members should use this pause to work through the questions and issues of members with an aim to get closer to a plan that can see the reduction of GHG in shipping. Every effort on every front counts, on the journey to sustainability.

Vanessa Mason is a Research Assistant at the Shridath Ramphal Centre for International Trade Law, Policy & Services of The University of the West Indies, Cave Hill. Learn more about the SRC at www.shridathramphalcentre.com.