A readout from University College London (UCL) finds that a large majority of IMO member states continue to support greenhouse gas (GHG) pricing and a centralised fund to support shipping's transition, following "steady progress" on the Net Zero Framework at this week's ISWG-GHG 22 meeting.

The Net Zero Framework is the regulatory mechanism through which the IMO aims to implement its 2023 Strategy, which set a goal of net-zero GHG emissions from international shipping by or around 2050, with indicative checkpoints in 2030 and 2040. Its adoption was adjourned at an extraordinary session of the Marine Environment Protection Committee last October, leaving the schedule for final decisions compressed into this year's remaining meetings.

The view comes in the UCL Shipping and Oceans Research Group's readout of the meeting, published Friday, and rests on 38 member states speaking in favour and 17 against — a two-thirds majority among those who took the floor, with a small number of speakers recorded as ambiguous. Neither the readout nor the IMO's own summary states how many of the organisation's 176 members participated in the session; by comparison, 127 states voted or abstained when adoption of the framework was adjourned last October.

The finding cuts against any impression of stalemate: the group of states pushing a technical-only solution without pricing "remained small and consistently composed of strongly fossil fuel aligned governments", the research group at the UCL Energy Institute said in a press release accompanying the readout.

Alternative Proposals

Five alternative proposals were on the table, from Brazil, Tuvalu, Japan, the UAE, and Liberia, several of them "rather tentatively put forwards" by proponents whose stated preference remained the framework as agreed, the readout says.

Of those, Japan's proposal to replace GHG pricing with shipowner-directed contributions "was robustly rejected, particularly by the member states that would need to 'swing' to support it for this to start to build momentum."

That rejection matters because direct contributions to existing IMO programmes were among the alternatives the US delegation said this week it could accept, alongside Brazil's "facility" concept.

GFI Trajectory and Market Design

On the Global Fuel Intensity (GFI) reduction pathway, the readout expects the trajectory "to be softened initially (around 2030), but then steeper in the period to 2040." The GFI mechanism would require ships to reduce the emissions intensity of the fuels they use, with rewards for vessels operating on zero and near-zero emission fuels — the design choices around which carry significant implications for the economics of alternative fuels such as green methanol, ammonia, and biofuels.

Rewards for zero and near-zero fuels remain broadly supported, and the analysis notes "broad support for a multiplier, despite it being taken off the table at the last meeting", which it says could yet see one incorporated.

A majority of states opposed adding energy-efficiency surplus units or printing units to manage a price shock, citing the risk of destabilising the surplus unit market. China's proposal to net remedial unit payments against rewards in a single transaction won broad support, subject to guidelines and to concerns about bypassing the fund's governance.

Analysts Urge Caution

"Whilst there are many positives to take away, there is clear potential for a return to a strong policy solution and decision making this December, there remains high uncertainty in the extent that both industry's transition and low-income countries' transitions will be supported," said Dr Tristan Smith, professor of energy and transport at UCL.

"There remains high risk that in the effort to find a creative way forwards, the equilibrium between these two aspects, that enabled the NZF in the first place, is lost to the detriment of the outcome overall."

The group's Dr Annika Frosch added that "a clear majority of delegations still regard a Fund, Facility, or similar financial structure as essential to implementing the 2023 IMO Strategy."

For those making investment decisions, the readout's advice is blunt: "Do not try to use this meeting as a signal you can finalise decisions around," it says, adding that "the devil is still in the detail."

It nonetheless expects a clarification or agreement at the Marine Environment Protection Committee (MEPC) in November, judging the risk of a repeat of last October's disruption to be lower, with the chair confident the group will conclude its work at MEPC 85.

The meeting did not progress draft MARPOL text, which UCL says will now have to evolve informally before ISWG-GHG 23 and MEPC 85 in November and December.

The full readout is available at UCL Shipping and Oceans.