The recent IMO Marine Environment Protection Committee (MEPC) 83 session landed some important developments: Building on the IMO’s landmark 2023 strategy to achieve net-zero emissions from shipping by around 2050, member states have now approved groundbreaking regulations to significantly cut greenhouse gas (GHG) emissions from international shipping. Odfjell fully supports this development.
Landmark agreement despite negotiation challenges
During the negotiations, the USA withdrew over concerns about potential inflationary effects. Nevertheless, the regulations were approved by a decisive majority, marking a historic step toward maritime sustainability.
Overview of the new GHG regulations
MEPC 83 approved a new Chapter 5 in MARPOL Annex VI—known as the IMO Net-Zero Framework—alongside amendments to existing regulations. These changes will be formally adopted at an extraordinary MEPC session in October 2025, pending acceptance by two-thirds of MARPOL Annex VI parties, representing at least 50% of global merchant fleet tonnage. The regulations apply to all international ships over 5,000 GT.
Understanding the Greenhouse Gas Fuel Intensity (GFI) Regulation
The IMO Net-Zero Framework introduces two sets of targets to reduce emissions:
- The Base GFI targets act as the trajectory that ships must meet to reduce their emissions by switching to alternative fuels. These targets will act as the minimum compulsory decarbonization trajectory.
Base GFI Targets serve as the compulsory minimum standards that ships must achieve through alternative fuel adoption. Failure to meet these base targets results in the requirement to purchase Tier 2 Remedial Units (RUs) (Orange band in the figure below), priced at $380 per tonne of CO₂e until 2030. This higher cost aims to incentivize proactive emission reductions rather than enabling a "pay-to-pollute" scenario.
- Additionally, ships must aim to meet the Direct Compliance (DC) GFI Targets, which serve as secondary compulsory goals. Failure to meet these secondary targets results in the purchase of Tier 1 Rus (blue band in the figure), priced at $100 per tonne of CO₂e until 2030, offering a more gradual transition path.
Ships surpassing the DC GFI targets earn Surplus Units (SUs) (Green band in the figure), which can be banked for future compliance (up to two years), sold to under-compliant ships, or voluntarily cancelled. SUs generated by ships utilizing advanced, costly e-fuels will help bridge the economic gap with more affordable low-carbon alternatives.
