(www.MaritimeCyprus.com) Negotiations at the International Maritime Organization (IMO) surrounding global carbon pricing for international shipping have intensified. Following high-stakes sessions at MEPC 83 and MEPC 84, member states remain locked in debate over economic measures to complement the goal-based Global Fuel Standard under MARPOL Annex VI.
With formal adoption scheduled for MEPC 85 (Autumn 2026), several proposals stand alongside or aim to modify the baseline IMO Net-Zero Framework (NZF).
What is the IMO Net-Zero Framework (IMO NZF Baseline)?
The IMO Net-Zero Framework (IMO NZF) serves as the baseline measure under MARPOL Annex VI to reduce maritime greenhouse gas (GHG) emissions. It combines target-based GHG Fuel Intensity (GFI) mandates with an economic revenue-collecting mechanism.
Vessels over 5,000 gross tonnage exceeding annual carbon intensity targets must purchase Remedial Units (RUs) priced at $100/tCO₂e (Tier-1) or $380/tCO₂e (Tier-2). Revenue feeds directly into a centralized IMO Net-Zero Fund to support green fuel adoption and a Just Transition for developing countries.
Key Drawbacks of the IMO NZF Baseline
- High administrative complexity managing two-tier pricing.
- Potential to increase ocean freight rates on essential goods.
Market Prospects
High probability of serving as the primary negotiation foundation at MEPC 85.
Supporters vs. Opponents
- For: European Union member states, United Kingdom, progressive shipowners, Pacific island allies.
- Against: Fossil-fuel-producing nations, agricultural exporting countries, open-registry flag states.
What is the Brazil Proposal for Maritime Carbon Pricing?
The Brazil proposal (co-sponsored by Argentina, China, and South Africa) introduces a Flexibility & Revenue-Neutral Mechanism (IMSF). Rather than imposing a fixed global carbon tax, it enforces a dynamic penalty/reward system ("feebate").
Vessels underperforming against baseline efficiency targets pay penalties that directly finance financial rewards for high-efficiency ships or zero-emission fuel adopters.
Key Drawbacks of Brazil's Proposal
- Generates minimal revenue for out-of-sector climate adaptation in climate-vulnerable nations.
- Complex dynamic payout calculations.
Market Prospects
Moderate; acts as a pivotal compromise option for developing exporters concerned about trade competitiveness.
Supporters vs. Opponents
- For: BASIC nations (Brazil, South Africa, India, China), Latin American agricultural exporters.
- Against: Small Island Developing States (SIDS), Least Developed Countries (LDCs), European Union states.
What is the Liberia Proposal for IMO Carbon Measures?
The Liberia proposal (co-sponsored by Panama and Argentina) retains mandatory technical GFI targets but completely removes the mandatory global carbon price and IMO Net-Zero Fund.
Under this scheme, shipowners achieve compliance strictly through market-traded Surplus Units (SUs) and operational measures, keeping financial transactions strictly between private maritime operators rather than a global UN body.
Key Drawbacks of Liberia's Proposal
- Lacks a strong financial penalty signal to narrow the price gap between fossil fuels and alternative fuels.
- Fails to generate funding for climate adaptation or port infrastructure in developing regions.
Market Prospects
Low to moderate; struggled to gain majority consensus during preliminary MEPC negotiation rounds.
Supporters vs. Opponents
- For: Open-registry flag states (Liberia, Panama), select shipowner trade associations.
- Against: SIDS, LDCs, EU member states, environmental NGOs.
What is the Japan Proposal for Shipping Emissions Flexibility?
The Japan proposal pivots away from fixed global taxation toward enhanced market-driven flexibility. It advocates easing post-2030 GFI targets and eliminating mandatory Remedial Unit fees paid to a centralized IMO fund.
Instead, Japan proposes an expanded Surplus Unit (SU) trading market where non-compliant vessels acquire emission offsets directly from operators exceeding their decarbonization targets.
Key Drawbacks of Japan's Proposal
- Risk of extreme price volatility in the Surplus Unit trading market.
- Absence of a fixed carbon price ceiling reduces investment predictability for green fuel producers.
Market Prospects
Moderate as a compromise drafting component rather than a standalone framework.
Supporters vs. Opponents
- For: Major shipbuilding hubs, Japanese maritime conglomerates, flexible registry supporters.
- Against: Pacific Island nations, climate-vulnerable states, EU climate regulators.
What is the Tuvalu / 6PAC+ Proposal for a Universal GHG Levy?
The Tuvalu and 6PAC+ proposal (backed by Pacific and Caribbean island nations) demands a mandatory, universal GHG Levy starting at $150 to $300+ per tonne of CO₂-equivalent.
Under MEPC 85 submissions, Tuvalu also advocated raising the NZF Tier-1 Remedial Unit price to $300/tCO₂e, ensuring high revenues for climate damage mitigation and global port infrastructure adaptation.
Key Drawbacks of Tuvalu's Proposal
Strongest direct financial cost on global maritime trade, leading to higher consumer import prices.
Market Prospects
High influence on upper-tier price negotiations, driving the moral mandate at the IMO.
Supporters vs. Opponents
- For: Small Island Developing States (SIDS), LDCs, environmental NGOs.
- Against: Major fossil fuel exporters (e.g., Saudi Arabia), large manufacturing exporters (China, US pushback).
Global Maritime Carbon Price Proposals: Summary Comparison
| Carbon Price Proposal | Core Pricing Mechanism | Main Objective | Key Drawbacks | Key Supporters | Key Opponents |
| IMO NZF Baseline | 2-Tier Remedial Units ($100–$380/t) | Balanced decarbonization & fund creation | High administrative burden | EU, UK, Progressive Allies | Fossil Fuel Exporters, Flag Registries |
| Brazil Proposal | Revenue-neutral Feebate System | Protect export trade; reward green ships | Low climate adaptation funding | BASIC Bloc, South American Exporters | Island States (SIDS), EU |
| Liberia Proposal | Technical GFI only; no carbon levy | Avoid central maritime tax | Weak economic driver for alternative fuels | Liberia, Panama, Shipowner Groups | SIDS, LDCs, EU, Climate NGOs |
| Japan Proposal | Relaxed GFI & SU trading market | High market flexibility | High unit price volatility | Japanese Maritime Sector | Pacific Island Nations, EU |
| Tuvalu / 6PAC+ | Universal Levy ($150–$300+/tCO₂e) | Accelerate zero-emission transition & revenue | Higher global ocean freight costs | SIDS, LDCs, Climate Allies | Major Exporters, Energy Producers |
The information and operational advice contained in this publication are provided for general informational and educational purposes only and do not constitute legal, financial, technical, or regulatory advice. While every effort has been made to ensure the accuracy and completeness of the regulatory summaries and strategies presented herein, no representation or warranty, express or implied, is made regarding their accuracy, fitness for a particular purpose, or applicability to specific operational circumstances. Regulations governing maritime decarbonization (including IMO, EU, UK, and regional frameworks) are subject to frequent updates and localized enforcement interpretations. Readers, shipowners, technical managers, and charterers should not act or rely upon any information contained in this article without seeking professional legal counsel, classification society verification, or tailored technical consultation appropriate to their specific vessels and contracts. The authors and publishers disclaim all liability and responsibility for any loss, damage, penalties, or operational disruptions arising directly or indirectly from reliance on the contents of this document.
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