IMO Net Zero Framework

In April 2025, the International Maritime Organization’s Marine Environment Protection Committee (MEPC 83) took historic steps in approving its Net-Zero Framework, which will have wide-ranging impacts for the industry once adopted.

Further clarity will emerge from a further extraordinary MEPC – to be held in October 2025 – but until then this remains a highly dynamic landscape. At Bureau Veritas, we are committed to bringing you clear explanations and guidance through various fuel scenarios. This page will be regularly updated to keep you informed of the latest developments at IMO level.

What were the outcomes of MEPC 83?

The committee approved mid-term measures to implement the 2023 IMO Strategy on the Reduction of GHG Emissions from Ships. These measures will be laid out in a new fifth chapter under Annex VI of the International Convention for the Prevention of Pollution from Ships (MARPOL).

The IMO Net-zero Framework is a world first, combining a mandatory GHG fuel intensity (GFI) standard and a GHG pricing mechanism across an entire industry sector.

The framework will apply to large ocean-going ships over 5,000 GT.

This mechanism is due to be formally adopted at an extraordinary session of the MEPC in October 2025.

The new framework defines “Surplus Units” (SUs) for over-performing ships, and deficits for under-performing ships that can be resolved with priced “Remedial Units” (RUs) or transfer of SUs. The system will include two tiers of annual GFI compliance:

Tier 1: a Direct Compliance target, with lower RU pricing
Tier 2: a Base Target, with higher RU pricing

IMO will publish guidelines to further detail the framework, including details on its functioning – IMO GFI Registry, IMO Net-Zero Fund, Zero and Near-Zero (ZNZ) technologies – and on the certification of fuels.

IMO two-tier target GFI mechanism

GFI at a glance

GFI accounts for a ship’s well-to-wake (WtW) GHG emissions per unit of energy used onboard, including onshore power delivered, and wind-assisted or solar power. Ships must report the attained GFI on an annual basis.

All ships must meet the direct compliance target. Ships with a lower GFI than the direct compliance target will receive SUs, but ships exceeding this limit will be in a compliance deficit and will accrue two tiers of RUs. The two-tier target and annual GFI reduction factors are shown in the table above.

When is this mechanism due to come into effect?

The proposed mechanism should enter into force in spring 2027, 16 months after its adoption. Then, from 1 January 2028, data will need to be collected for the full calendar year to calculate and report the ship’s attained annual GFI in 2029.

See below the key stages that ships will be subject to up until 2029 as part of the regulatory framework annual GFI reporting and verification.

Annual GFI reporting & verification: implementation timeline

What do the outcomes of MEPC 83 mean for shipowners?

Bureau Veritas experts have already analyzed the potential impacts of for shipowners moving forward. Specifically, we have developed a model to map the cost impact of these measures and have run simulations on three key ship types: LNG carriers, tankers and container ships.

Our simulations with a variety of different fuel options to see how each could be expected to perform, and the impact on future costs.

These mid-term measures are not fully complete, so it was necessary to make a number of assumptions for our model, including:

Fuel carbon intensity

We based our analysis on the IMO framework on life cycle GHG intensity of marine fuels, as well as the EU’s FuelEU Maritime Regulation and Renewable Energy Directive

Price of RUs and SUs

We consider the RU price for Tier 1 and 2 to remain the same after 2030
SU revenue is not accounted for

Zero or near-zero (ZNZ) fuels

Additional revenue from ZNZ fuels is not considered as further guidance from the MEPC is required

Fuel prices

This information was based on the IMO’s comprehensive impact assessment of the basket of candidate GHG reduction mid-term measures

Fuel consumption

We based our assumptions on our internal databases

EU Emissions Trading System

We assumed a fixed cost of 75 USD/tCO₂e

Key takeaways from Bureau Veritas’ analysis

Under our projection, by 2028, no fossil fuel will be compliant with the IMO’s Net-Zero Framework, including low-methane slip LNG. As a result, vessels running on fossil diesel will start paying the Tier 2 penalty in 2028. What’s more, only pure bio- and e-fuels with high sustainability ratings will count as ZNZ, so bio- or e-LNG with high methane slip will probably struggle to qualify. In addition, solar, wind assistance and onboard carbon capture and store technologies may qualify as ZNZ, but guidelines are currently under construction and need to be drafted.

The outlooks for 2030 and 2035 look similar, but there are a few main points of differentiation. In both projections, LNG (in low-methane slip engines) will be the most cost-effective solution. By 2030, bio blends with around 10% of bio share will also become a cost-effective solution; by 2035, the share of bio should reach around 40% to be cost effective.

According to our projections, in both 2030 and 2035, the impact of the mid-term measures will not balance the cost of pure low-carbon fuels. However, the ZNZ reward may cover part of that price gap in both projections, potentially encouraging an earlier transition toward low carbon fuels. In 2030, EU regulations will impose higher penalties than the IMO’s mid-term measures, mostly because of the ETS, but that gap will close by 2035. In 2035, up to 40% biofuel will be necessary for Tier 2 compliance.

2030 Fuel costs with the net-zero framework: bio blends become a cost-effective solution

2035 Fuel costs with the net-zero framework: NZF does not yet cover the price gap with pure low-carbon fuel

Projections for three key ship types

Medium-range tanker
- The new measures will double operating costs by 2035 in the base case, wherein the ship consumes 6,400 MT of very low sulfur fuel oil (VLSFO) in one year:
- The Tier 1 penalty is forecasted to have a limited impact (+10%) as it is capped.
- However, noncompliance with Tier 2 is not an option as that would increase fuel costs by 20% in 2028 and 36% in 2030.
- Biofuel blends will provide a cost-effective solution compared to traditional fossil fuels, especially in the early years after 2028.
- The following operating costs projection is for an energy ratio of 25% biofuel (5,100 MT of VLSFO and 1,553 MT of hydrotreated vegetable oil (HVO) consumed in one year):
- 25% biofuel allows to remain Tier 1 compliant until 2031 and Tier 2 until 2033.
- Actual fuel cost would be reduced by ZNZ reward. However, the IMO has not yet released the relevant guidelines.
- To maintain compliance with both Tier 1 and 2 by 2035, 53% biofuel will be required.
15k TEU container ship
- Operating costs expected to double by 2035 in the base case, wherein the ship consumes 16,300 MT of VLSFO in one year:
- The Tier 1 penalty is forecasted to have a limited impact (+10%) as it is capped.
- However, noncompliance with Tier 2 is not an option, as that would increase fuel costs by 20% in 2028 and 36% in 2030.
- In 2028 at least 8% biofuel should be used to avoid paying Tier 2 penalties.
- LNG with low methane slip is a cost-effective short-term solution for this ship type.
- The operating costs are projected as the following, if the ship were to use 1,630 MT of light fuel oil and 12,290 MT of LNG (slow speed high pressure):
- This fuel mix enables Tier 2 compliance until 2032, making it a cost-effective solution for the first few years.
- Additionally, 10% bio-LNG provides two additional years of compliance (until 2034), with the following expected cost projection (with annual consumption of 1,630 MT of light fuel oil, 11,060 MT of conventional LNG and 1,230 MT of bio-LNG):
- This fuel mix enables Tier 2 compliance until 2034.
- The SU would allow an additional revenue of 1 million USD during the initial years, but would cease after 2030.
- The ZNZ reward would also apply on bioLNG and SUs would be generated until 2030, which could generate additional revenues.
174k LNG carrier
- Operating costs expected to double by 2035 in the base case (with consumption for a round-trip US-EU voyage of 27 MT of marine diesel oil (MDO) and 1,900 MT of LNG):
- With a low-pressure LNG engine and 1.7% methane slip, Tier 1 compliance will be impossible with fossil fuels in 2028.
- The Tier 1 penalty is forecasted to have a limited impact (+10%) as it is capped.
- However, noncompliance with Tier 2 is not an option, as that would increase fuel costs by 20% in 2028 and 36% in 2030.
- Bio-LNG is a cost-effective solution for Tier 2 compliance (with consumption for a round-trip US-EU voyage of 27 MT of MDO, 1,520 MT of conventional LNG and 1,380 MT of bio-LNG):
- The vessel would remain Tier 1 compliant until 2031 and Tier 2 compliant until 2034 (three years later than the base case).
- Operating costs in 2035 would be reduced compared to base case, but not in 2030.
- The addition of bio-LNG is cost effective for Tier 2 compliance, not tier 1 compliance

Want to find out more, or discuss further scenario models with our experts?

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