LONDON, 21 October 2025 — The International Maritime Organization (IMO) has postponed the adoption of its Net-Zero Framework (NZF) for another year. While the delay adds further uncertainty, it also offers an opportunity to refine the framework’s mechanisms to ensure a fairer and more practical pathway towards maritime decarbonisation.
Ahead of the IMO’s MEPC meeting, maritime decarbonisation specialists at Rystad Energy identified several major shortcomings in the current NZF. Their analysis revealed a significant gap between projected clean-fuel availability and the demand targets set by the framework, a shortfall exacerbated by limited infrastructure. This mismatch raises serious doubts about the feasibility of the proposed transition timeline.
The study also pointed to an ongoing imbalance in the carbon-trading system. Demand for Tier II remedial unit offsets is expected to exceed the availability of surplus units through 2035, creating a structural deficit likely to push trading prices close to the Tier II penalty ceiling.
Rystad Energy emphasised that the reward mechanism must be carefully designed to avoid becoming little more than a penalty collection scheme. Although the cost gap between fossil fuels and cleaner alternatives is expected to narrow as technology advances and economies of scale take effect, strong and consistent incentives are still essential to drive sustainable adoption.
“Decarbonising the maritime sector is a complex challenge that extends far beyond shipping itself, it is closely linked to the global transition from fossil fuels to renewable energy,” said Junlin Yu, Vice President of Supply Chain Research at Rystad Energy.
“Progress will likely lag behind the IMO’s current expectations due to infrastructure limitations, technology readiness, and wider energy system interconnections. The IMO should use this extra year to refine the NZF into a more practical and equitable framework.”
Under the NZF, compliant vessels can generate Surplus Units (SUs), while non-compliant ones produce Remedial Units (RUs). These RUs are divided into two tiers: Tier I for vessels meeting the base target, and Tier II for those that fall short. Non-compliant vessels may offset their Tier II RUs by purchasing SUs from compliant ships.
Rystad’s projections show that SU supply will start at 40 million tonnes of CO₂ equivalent in 2028, rising to 53 million tonnes by 2035. In contrast, Tier II RUs are forecast to surge from 47 million to 234 million tonnes annually over the same period, a disparity likely to drive SU trading prices close to the Tier II penalty level of US$380 per tonne.
Financially, Tier I and Tier II penalties could generate about US$13 billion for the IMO Net-Zero Fund in 2028, climbing to nearly US$79 billion by 2035. However, Rystad cautions that these funds may still fall short of offsetting the high cost of zero- or near-zero-emission fuels until 2030.
“Beyond 2030, we expect a significant surplus in the fund as clean technologies mature and uptake increases,” Yu noted. “But the IMO must ensure this fund is used to drive genuine emissions reductions, not simply accumulate capital.”
