Japan has submitted a proposal to the IMO's Marine Environment Protection Committee (MEPC 85) that would ease greenhouse gas fuel intensity (GFI) reduction targets beginning in 2030 and replace the IMO Net-Zero Fund with a "direct contribution" mechanism.

The Net-Zero Framework (NZF), approved at MEPC 83, introduced a two-tier GFI standard requiring ships to progressively reduce well-to-wake greenhouse gas (GHG) emissions from 2028 onward. The framework operationalizes the 2023 IMO GHG Strategy, which set a goal of reaching net-zero emissions from international shipping by or around 2050 with indicative checkpoints of approximately 20% reduction by 2030 and 70% by 2040 compared to 2008 levels. The reductions are benchmarked against a 2008 baseline of 93.30 grams of CO2-equivalent per megajoule (gCO2e/MJ). Under the framework, GFI reduction targets consist of a base target and a direct compliance target, ranging from 4–17% in 2028 and tightening to 30–43% by 2035.

Japan, one of the world's largest shipowning nations by tonnage, proposes easing the reduction trajectory from 2030 onward while leaving the 2028–2029 targets unchanged. Japan notes that the revised draft amendments "do not represent the preferences of Japan" and are intended only as a basis for discussion aimed at reaching a convergence acceptable to all member states.

Under the proposal, the base target for 2030 would be relaxed from 85.84 gCO2e/MJ to 86.8 gCO2e/MJ. By 2035, the target would follow a less aggressive path to 72.9 gCO2e/MJ instead of 65.31 gCO2e/MJ. Japan also proposes adjusting the direct compliance target, easing it from 73.71 gCO2e/MJ to 74.6 gCO2e/MJ in 2030, and from 53.18 gCO2e/MJ to 60.7 gCO2e/MJ in 2035.

As an alternative, Japan puts forward a flat direct compliance target of 72.9 gCO2e/MJ — a 21.9% reduction — applicable to every year from 2028 to 2035. This would be stricter than the current draft's targets through 2030 but looser from 2031 onward.

Additionally, Japan proposes removing the 65% base target for 2040, leaving the 2036–2040 reduction factors to be determined by the Committee by 1 January 2032, "taking into account the global availability, affordability and scalability of new fuels and technologies."

Under the approved NZF, ships that miss the direct compliance target pay $100/mtCO2e in Tier 1 remedial units, while ships that also miss the base target pay $380/mtCO2e in Tier 2 remedial units. Ships that overcomply can earn surplus units to trade or bank for future use.

Japan has suggested removing the opportunity to purchase remedial units entirely. Instead, ships that fail to meet required GFI targets could either purchase surplus units from over-complying ships or make contributions directly to eligible projects of their own choosing, rather than paying into the IMO Net-Zero Fund.

The proposed mechanism largely mirrors the categories of eligible projects outlined in the NZF's revenue distribution provisions, though it replaces rewards for zero and near-zero fuels with support for the broader uptake of new fuels and technologies.

Japan's proposal also sets out a governance framework under which flag administrations would nominate eligible projects, the IMO would determine which projects qualify, and the proposing administration would audit the entity implementing each project and report the results.

The direct contributions would be calculated using the same pricing as the remedial units in the current draft, at a minimum of $100/mtCO2e for Tier 1 emissions and $380/mtCO2e for Tier 2 emissions.

Furthermore, Japan's proposal drops regulation 39 of the approved NZF, which establishes the threshold for zero and near-zero GHG emission technologies and fuels (ZNZs) and provides rewards from the IMO Net-Zero Fund for ships using them.

Japan builds on a proposal it first tabled at MEPC 84. However, under standard IMO procedures, draft amendments to MARPOL are normally required to be circulated at least six months before they can be adopted. A proposal submitted after June would therefore not ordinarily be eligible for adoption at the resumed second extraordinary session (MEPC/ES.2) scheduled for 4 December, the session at which member states intend to finalize and adopt the NZF.

In that scenario, member states could choose to waive the six-month requirement and proceed with adopting the NZF at MEPC/ES.2. Alternatively, they could delay adoption to a later session, such as in 2027, according to Tristan Smith, co-lead of the Shipping and Oceans Research Group at University College London.

Source: By Konica Bhatt, ENGINE,