The Week in Alternative Fuels: Competing Visions Shape IMO Net-Zero Framework

Competing proposals from Tuvalu, Brazil, Liberia, and a four-country bloc known as ACSA-UK could steer the IMO's Net-Zero Framework in markedly different directions when the Marine Environment Protection Committee (MEPC) reconvenes this November to reshape shipping's decarbonization rulebook.

International shipping, which carries roughly 90% of global trade, accounts for nearly 3% of worldwide greenhouse gas emissions, giving the outcome of these negotiations broad implications for both climate targets and global supply chains.

The framework approved at MEPC 83 in April 2025 remains the baseline, but the current range of options spans from significantly strengthening economic measures to eliminating greenhouse gas (GHG) pricing altogether. Japan has also submitted an alternative proposal, though its eligibility for adoption remains uncertain.

Tuvalu's Ambitious Proposal

Tuvalu has put forward the most far-reaching plan. The island nation, one of the most climate-vulnerable states in the world, proposes keeping the Net-Zero Framework's (NZF) base GHG fuel intensity (GFI) reduction targets intact but eliminating the 2028 step, so the trajectory starts at 6% in 2029. It also calls for a direct compliance target of 100% from 2029 through 2035.

Additionally, Tuvalu seeks to triple the initial Tier 1 remedial unit price from $100/mtCO2e to $300/mtCO2e while keeping Tier 2 at $380/mtCO2e. Surplus units would be eliminated entirely, meaning both compliance tiers could only be balanced through payments into the IMO Net Zero Fund.

While this approach would generate the largest revenue pool to support zero-emission fuels and a just and equitable transition, it would also lead to the steepest transport cost increases, especially in the early years, according to Tristan Smith, co-lead of the Shipping and Oceans Research Group at University College London.

ACSA-UK: Preserving the Status Quo

A joint proposal from Australia, Canada, South Africa, and the UK (ACSA-UK) leaves the current NZF largely intact, including its emissions intensity targets and compliance payment levels. However, it would delay implementation by one year following the postponement of negotiations amid severe disagreements at MEPC ES.2 in October 2025.

Sapphire Ross, policy officer at Opportunity Green, emphasized that the NZF operationalizes the polluter-pays principle by ensuring those responsible for emissions help finance the transition in the most climate-vulnerable countries.

"Governments should protect this hard-fought agreement and resist attempts to weaken the core economic elements that underpin its effectiveness," she said.

Brazil's Gradual Approach

Brazil's proposal eases compliance requirements during the first two years by aligning the base and direct compliance targets in 2029 and 2030, before reverting to the approved NZF trajectory from 2031 onward. To compensate for the softer start, Brazil has proposed tightening the long-term base target to 70% in 2041 rather than 65% in 2040, giving shipowners additional time to adjust in the initial years.

Liberia: Removing GHG Pricing Entirely

Liberia, which operates one of the world's largest ship registries by tonnage, has submitted a proposal that, building on a prior joint proposal by Argentina, Liberia, and Panama submitted to MEPC 84, represents the opposite end of the spectrum. It eliminates GHG pricing altogether and revises the GFI reduction trajectory. Rather than aligning GFI targets with the 2023 IMO GHG Strategy checkpoints, targets would be calculated based on the cost, availability, and market share of low-emission fuels, with the trajectory recalculated every five years.

The 2023 IMO GHG Strategy, adopted under the Revised Strategy, set a goal of reaching net-zero GHG emissions from international shipping by or around 2050, with indicative checkpoints for reducing total annual emissions by 20%–30% by 2030 and 70%–80% by 2040 compared to 2008 levels.

Liberia's proposal retains surplus units (SUs) as the sole compliance mechanism, replacing the NZF's pricing system. Ships would be permitted to transfer, bank, and borrow surplus units to meet their GFI targets.

Smith cautioned that this approach could introduce greater uncertainty over future fuel standards and compliance credit prices, since the framework would no longer be tied to specific emissions reduction goals. He also noted that without a dedicated fund, there would be no clear mechanism to support a just and equitable transition or redistribute revenues to countries most affected by higher transport costs.

Opportunity Green argued that Liberia's proposal would replace mandatory remedial units with "greater reliance" on a market-based surplus unit trading mechanism.

"This would weaken the stable price signal needed to unlock long-term investment in genuinely zero-emission fuels, instead exposing compliance costs to the volatility of carbon markets," the organization stated.

"At the same time, removing or substantially reducing contributions to the Net Zero Fund would strip away a dedicated source of finance to help developing countries build capacity, strengthen resilience and participate in the maritime transition."

During MEPC 84 discussions in April 2026, IMO member states including Oman, Kuwait, Jordan, Somalia, Yemen, and Tunisia expressed support for Liberia's proposal.

Japan's Alternative Framework

Japan has submitted a discussion paper aimed at softening GFI reduction targets from 2030 onward while replacing payments into the Net Zero Fund with a "direct contribution" mechanism. Under this system, shipowners could either purchase surplus units to cover non-compliance or contribute directly to projects proposed by member states and approved by the MEPC, rather than buying remedial units.

According to Smith, the proposal addresses concerns raised by the United States and other nations regarding the IMO managing large revenue flows. However, he warned that allowing companies to determine where compliance payments are directed could weaken incentives for zero- and near-zero-emission fuels, complicate governance, and introduce additional uncertainty into both compliance credit markets and investment decisions.

Sinem Onis, vice president of energy at Marsh McLennan, noted that the "direct contribution" mechanism would offer little commercial incentive for shipowners to direct contributions toward projects in small island developing states or least developed countries. Furthermore, opening direct competition between lower-cost options such as LNG and biofuels and more expensive zero- and near-zero-emission fuels could naturally favor cheaper technologies.

Path Forward

The proposals from Tuvalu, ACSA-UK, Brazil, and Liberia will be debated at the IMO's intersessional GHG working group meetings in September and November, before delegates consider the framework at MEPC 85, scheduled for 30 November to 3 December.

If member states reach consensus on a final text, the amendments could be formally adopted at the second extraordinary session of the MEPC (MEPC ES.2), expected to reconvene on 4 December.

Japan's proposal faces a procedural obstacle, as draft MARPOL amendments are typically required to be circulated at least six months before adoption under IMO procedures. A proposal submitted after June would therefore not ordinarily qualify for adoption in December. Member states could choose to waive this requirement and proceed with adopting the NZF at MEPC ES.2, or they could postpone adoption to a later session, such as in 2027, Smith noted.

The stakes extend beyond environmental policy. Shipowners and operators are already making multi-decade investment decisions on vessels and fuel infrastructure, and the final shape of the NZF will influence which technologies become commercially viable and how compliance costs ripple through global freight rates.

Other Alternative Fuels Developments

The Maersk Mc-Kinney Møller Center for Zero Carbon Shipping (MMMCZCS) reported that green marine fuels remain "substantially more expensive" than the fossil alternatives they are intended to replace, partly because fossil fuel prices do not account for the cost of climate damage. The center said the cost gap can be bridged through targeted financial support and subsidies.

Belgian shipping company Exmar plans to convert the 146,000-cbm LNG carrier Simaisa into a floating transshipment unit (FTU). Once converted, the FTU will receive large LNG cargoes from conventional LNG carriers, while LNG bunker vessels will load LNG from the FTU and deliver it to LNG-capable ships.

Global bunker supplier Peninsula has signed an agreement with Evos to develop biofuel storage infrastructure at the Port of Algeciras, aimed at expanding biofuel bunker capacity in the Strait of Gibraltar. The agreement covers Dutch chemical storage firm Evos's planned 60,000-cbm dedicated biofuel storage facility at its Algeciras terminal.

Navigator Amon Shipping has secured a $122 million loan to finance two ammonia-capable gas carriers currently under construction in China. The 51,000-cbm gas carriers will be designed to transport liquefied ammonia as cargo and use it as propulsion fuel, while also being capable of carrying LPG as cargo.

Source: By Konica Bhatt, ENGINE,