IMO Uncertainty Threatens Shipping's 2030 Zero-Emission Fuel Target

Shipping faces a diminishing timeframe to achieve its 2030 objective for zero-emission fuels, despite ongoing expansion in methanol infrastructure and alternative-fuel vessel capacity, gCaptain reported. An assessment by the UCL Energy Institute and Getting to Zero Coalition indicates that progress has become increasingly uneven, with technological advancements counteracted by weaker demand, financing, and policy signals.

The central issue is uncertainty surrounding the IMO’s Net-Zero Framework. While agreed in principle last year, the framework has not yet received formal adoption. This framework aims to stimulate demand for lower-emission marine fuels by imposing stricter greenhouse gas intensity requirements, penalising higher-emitting vessels, and rewarding cleaner energy use. Its delayed adoption means shipowners, fuel producers, and lenders are making long-term investment decisions without clear regulatory guidance.

Impact of Regulatory Delay

The report, titled “Climate action in shipping: Progress towards shipping’s 2030 breakthrough,” describes last year’s failure to adopt the framework as the “single most transition-regressive event” since the annual assessment began five years ago. This regulatory uncertainty is now manifesting in market data.

The share of scalable zero-emission fuel-capable vessels within the global orderbook declined from 9.5% to 5.7% of tonnage over the past year. Concurrently, shipping-specific sustainable debt issuance decreased from $3.4 billion in 2024 to $3 billion in 2025, gCaptain stated. These reductions occurred despite continued technological progress, including an increase in ports offering methanol bunkering from 19 to 29 over the last year, a tripling of methanol-capable tonnage already in service, and the industry’s first ammonia bunkering operations and sea trials. These figures suggest that while the industry is increasingly capable of utilising alternative fuels, it lacks the necessary demand signals to support investment at previously envisioned scales.

Shipping’s 2030 target mandates that scalable zero-emission fuels constitute at least 5%, and preferably 10%, of fuel consumed in international shipping. This uptake level is considered a crucial step towards the IMO’s broader objective of achieving net-zero greenhouse gas emissions from international shipping by or around 2050. The report evaluated five areas vital for reaching this point: technology and zero-emission fuel supply were assessed as partially on track, as was civil society engagement. However, demand, finance, and policy were all rated as off track.

Divisions Over Economic Mechanisms

Dr. Pinar Langer, a research fellow at the UCL Energy Institute, commented that the failure to adopt the Net-Zero Framework was the most “transition-regressive event” observed in the five years the report has been running. This regulatory ambiguity is particularly critical for shipowners. Thousands of vessels ordered in the coming years could remain in service well into the 2040s, necessitating immediate decisions on engines and fuels that must comply with regulations still under negotiation.

The IMO’s Net-Zero Framework remains the principal proposal for establishing a global regulatory structure, but governments remain divided over its economic mechanism. The proposed framework would subject ships to increasingly strict limits on the greenhouse gas intensity of their fuels, while an economic mechanism would collect funds from higher-emitting vessels and reward cleaner energy use. This system is projected to generate approximately $10 billion to $15 billion annually, making both the cost to shipping and the distribution of revenues significant points of contention.

During recent IMO technical negotiations, 38 countries explicitly supported retaining carbon pricing and the revenue mechanism, while 17 countries, predominantly oil-producing nations, opposed it due to cost concerns. The United States has also emerged as an opponent of the framework, while European countries and Pacific Island states argue that weakening the economic mechanism would undermine investment in alternative fuels. The Getting to Zero Coalition warned that continued uncertainty could delay investment in zero-emission ships, fuels, and infrastructure as the industry approaches a major fleet renewal cycle.

Upcoming IMO meetings include a technical working group from 23-27 November, followed by MEPC 85 from 30 November to 3 December. The Net-Zero Framework is expected to be considered for adoption at an extraordinary MEPC session on 4 December. With only four years remaining until 2030, the primary challenge is whether regulation, investment, and demand can align with emerging technological solutions, gCaptain concluded.