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Shipping’s proposed global greenhouse-gas pricing system survived another difficult week at the International Maritime Organization, but the September negotiations ended without the compromise text needed to settle the issue. Nearly 1,200 delegates attended the September 1-4 ISWG-GHG 22 talks in London. A UCL-based readout counted 38 states explicitly supporting carbon pricing and associated revenues against 17 opposing it, while the IMO’s official summary said delegations still need further negotiations before revised text can be put in front of MEPC 85. The next working group meets November 23-27, MEPC 85 follows November 30-December 3, and the extraordinary session originally adjourned in 2025 is scheduled to resume on December 4, 2026, subject to confirmation by MEPC 85.
December Showdown Snapshot
Carbon pricing survived the September negotiations, but the price mechanism, revenue structure and early emissions pathway remain exposed to last-minute compromise.
September interventions still showed substantially more support for a financial mechanism than outright opposition.
Opposition remains concentrated among the United States, Saudi Arabia and other fossil-fuel-aligned states.
The adjourned adoption session is scheduled to resume immediately after MEPC 85.
Tier 1 and Tier 2 remedial-unit prices in the currently approved framework.
Covered ships account for roughly 85% of international shipping's CO₂ emissions.
IMO Net-Zero Negotiation Board
The central architecture remains alive, but several pieces with major financial consequences are still negotiable before the December adoption session.
| Framework Element | Approved Draft | September Position | Financial Effect | Commercial Exposure | December Decision Point |
|---|---|---|---|---|---|
| GHG Fuel Intensity Standard | CORE ARCHITECTURE Well-to-Wake GFI Annual emissions intensity is measured in gCO₂e per MJ of energy used. | Broad support remains for progressively reducing ship GHG intensity. | Creates the compliance threshold that determines whether a ship generates deficits or surplus units. | Drives demand for lower-GHG fuels, efficiency retrofits, wind assistance, batteries, shore power and potentially carbon capture. | Exact early reduction trajectory may still be adjusted. |
| Tier 1 Remedial Units | PRICED $100 / tCO₂e Applies to the Tier 1 compliance deficit in the approved text. | Pricing architecture survived the September meeting. | Provides a recurring compliance payment even for ships that reach the Base target but miss Direct Compliance. | Creates an explicit value for incremental GFI improvement. | Price level and relationship with rewards remain politically exposed. |
| Tier 2 Remedial Units | HIGHER TIER $380 / tCO₂e Applies to the deficit above the Base target. | Remains part of the framework under negotiation. | Makes poor GFI performance substantially more expensive than the Tier 1 zone. | Strengthens the economics of fuel switching, efficiency projects and purchased surplus units. | The $100 and $380 prices are currently fixed only for the initial period through 2030. |
| IMO Net-Zero Fund | MAJOR DISPUTE $10B-$15B / Year Potential annual revenue commonly estimated around this range. | A clear majority still sees a fund, facility or similar financial structure as necessary, but the U.S. rejects an IMO-administered central fund. | Funds could reward cleaner fuels, infrastructure, R&D, training and transition support. | Reward design could materially change the delivered economics of ammonia, e-methanol, biofuels and other pathways. | Fund, temporary facility or another revenue structure. |
| GFI Reduction Path | OPEN TO CHANGE 2028-2035 Defined Base reduction rises from 4% in 2028 to 30% by 2035. | Analysis after the September meeting suggests the pathway could be softened around 2030 in exchange for a steeper later trajectory. | Small changes in the Base threshold can shift millions of dollars of annual compliance exposure across large fleets. | Alters timing for dual-fuel conversions, biofuel use, newbuild fuel choices and long-term offtake contracts. | Final annual reduction factors. |
| Surplus Unit Trading | STRONG SUPPORT Bank + Transfer Better-performing ships can generate surplus units. | Pooling and transfer mechanisms were among the least controversial parts of the negotiations. | Creates a second compliance market alongside remedial units. | Fleet operators could optimize performance across multiple ships instead of treating every hull independently. | Trading mechanics, limits and final registry rules. |
| China Netting Proposal | COMPROMISE IDEA Net Payments | China's proposal to net compliance payments and rewards into one transaction attracted broader support in September. | Could reduce the amount of gross cash moving through the central mechanism. | May simplify working-capital requirements and settlement. | Whether netting is incorporated into revised text. |
| Japan Direct Contributions | LIMITED TRACTION Owner-Directed | Japan proposed alternatives to centralized GHG pricing, but the concept drew relatively weak support. | Would change where compliance money flows and reduce the role of a centralized IMO fund. | Potentially changes clean-fuel investment incentives and revenue predictability. | Unclear whether any elements survive into compromise text. |
| Fuel Certification | TECHNICAL FOUNDATION Lifecycle Labels | Detailed implementation and LCA documents were largely deferred to the November working group because September ran out of time. | Determines the GFI value that a fuel can actually claim. | Expands demand for certification, MRV, lifecycle data, bunker documentation and compliance software. | Sustainable fuel certification, chain-of-custody and LCA methodology. |
IMO GFI Carbon Cost & Fuel-Switch Value Analyzer
Estimate Tier 1 and Tier 2 remedial-unit exposure under the currently approved Net-Zero Framework, then test the financial value of lowering a ship's well-to-wake GHG Fuel Intensity.
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