IMO Postpones Adoption of Net Zero Framework

As discussed in a previous Insight, the IMO Net-Zero Framework — approved at MEPC 83 in April 2025 — would introduce a carbon credit trading program for large ocean-going ships exceeding 5,000 gross tonnage. These vessels, which account for approximately 85 percent of the international shipping industry’s carbon dioxide emissions, would be required to meet annual GHG fuel intensity targets or offset excess emissions through banked credits, purchases from other ships, or contributions to a new IMO Net-Zero Fund. The framework aligns with the IMO’s 2023 Strategy on Reduction of GHG Emissions from Ships, aiming for a 40 percent reduction in carbon intensity by 2030 and net-zero emissions close to 2050.

The Postponement and Increasing Political Pressures

The IMO’s most recent extraordinary MEPC session ended without adoption of the IMO Net-Zero Framework after a motion to adjourn proposed by Saudi Arabia, which passed by a narrow margin of votes. The adjournment followed heightened political pressure and shifting positions among key Member States, including vigorous opposition by the Trump administration. On October 10, 2025, days before the extraordinary MEPC session, Secretary of State Marco Rubio, Secretary of Energy Chris Wright, and Secretary of Transportation Sean Duffy issued a Joint Statement “unequivocally reject[ing]” the IMO Net-Zero Framework and encouraging other nations to reject the adoption of the new measures at the then-upcoming session.[1] Although the Trump administration’s stance on the measures does not come as a surprise, given that U.S. delegates exited the April session early and did not participate in the vote, the Joint Statement goes so far as to threaten retaliatory actions against nations that supported the measures at the October extraordinary MEPC session, including:

• “Pursuing investigations and considering potential regulations to combat anti-competitive practices from certain flagged countries and potential blocking vessels registered in those countries from U.S. ports;
• Imposing visa restrictions including an increase in fees and processing, mandatory re-interview requirements and/or revisions of quotas for C-1/D maritime crew member visas;
• Imposing commercial penalties stemming from U.S. government contracts including new commercial ships, liquified natural gas terminals and infrastructure, and/or other financial penalties on ships flagged under nations in favor of the [IMO Net-Zero Framework];
• Imposing additional port fees on ships owned, operated, or flagged by countries supporting the framework; and
• Evaluating sanctions on officials sponsoring activist-driven climate policies that would burden American consumers, among other measures under consideration.” [2]

According to news reports of the extraordinary MEPC session, several countries that had previously backed the measures, and approved the IMO Net-Zero Framework in April 2025, abstained or changed their votes. EU members Greece and Cyprus, home to major shipping fleets, abstained. China, the world’s largest shipbuilder, switched from supporting the measure in April to voting for the delay. Other opponents included major fossil fuel producing countries, such as Saudi Arabia and Russia, many of which have argued that the IMO Net-Zero Framework sows global division and overlooks the potential economic impacts on citizens and economies. Major shipping nations such as Singapore and Liberia also objected.

The criticism of the framework focuses primarily on lack of sufficient supply for clean fuels that would meet the IMO Net-Zero Framework’s GHG intensity targets. Currently, while cooking-oil derived maritime fuels have the potential to meet the framework’s targets, supply constraints mean that these fuels will not be available in sufficient quantities to meet projected demand, raising the risk of financial penalties that could ultimately drive up consumer costs in an era of persistent inflation. When coupled with pressure from certain groups to exclude soy and palm-oil based maritime fuels from the framework, until costs come down for the production of e-fuels, some countries and groups see significant compliance challenges in the near-term. Similarly, although the IMO Net-Zero Framework incorporates a credit-purchasing system as a compliance pathway, recent studies call into question the availability of these credits to meet demand given the limited ability to bank credits for future years and the lack of fuels capable of meeting the IMO’s GHG intensity targets. Additionally, while the framework contemplates investment in port modernization/electrification and supporting low carbon fuel production using funds generated from the credit system, projected revenues do not appear sufficient help scale next generation low carbon fuels for the shipping industry at this time.

What to Watch Ahead of 2026

Despite the adjournment, technical work on the IMO Net‑Zero Framework continues. The Intersessional Working Group on the Reduction on Greenhouse Gas Emissions from Ships is expected to continue developing detailed guidelines for implementing the IMO Net-Zero Framework. The guidelines were originally expected to be approved at the 84th session of the MEPC in Spring 2026, but it is not clear whether the Intersessional Working Group is still working towards that goal. Over the next year, Member States are expected to pursue consensus-building, and the extraordinary session is set to reconvene around October 2026. If adopted at that time, the IMO Net-Zero Framework could still potentially enter into force for reporting year 2028, though this timeline is now uncertain.

The one-year delay is likely to amplify the existing uncertainty for the shipping industry, as there will be increased pressure from nations opposed to the measures to abandon or roll back the measures as previously approved. On the other hand, with global efforts on pause, there is increased risk of incremental or overlapping regional regimes to address GHG emissions from shipping. Stakeholders should monitor developments that could advance independently during the adjournment and consider potential interactions with any future IMO mechanism.

We will continue monitoring developments related to the proposed framework. Please reach out to your Vinson & Elkins team to discuss these matters and their implications for your business.

¹ Press Release, U.S. Dep’t of State, Secretary of State Rubio, Secretary of Energy Wright, and Secretary of Transportation Duffy, Taking Action to Defend America from the UN’s First Global Carbon Tax – the International Maritime Organization’s (IMO) “Net-Zero Framework” (NZF) (Oct. 10, 2025), https://www.state.gov/releases/office-of-the-spokesperson/2025/10/taking-action-to-defend-america-from-the-uns-first-global-carbon-tax-the-international-maritime-organizations-imo-net-zero-framework-nzf.

² Id.