A Fair Transition is on the Horizon for Shipping Sector this October

By Erica Morehouse

• The International Maritime Organization will have its chance to show leadership by adopting the Net Zero Framework, a set of global measures that include a fuel standard that accounts for the full lifecycle emissions of marine fuels and a legally binding greenhouse gas pricing mechanism to help steer international shipping toward net-zero emissions by 2050.
• For shipping’s transition to be lasting and effective, climate action must be Just and Equitable. By fairly addressing unequal impacts and benefits and amplifying the voices of those most affected, Member States can ensure solutions that are both impactful and sustainable for all.

Last week, New York City hosted a Climate Week ahead of COP30 that showed climate and a just transition are not underground issues, even in the U.S. In about two weeks, the International Maritime Organization will have its chance to show leadership by adopting the Net Zero Framework, a set of policies that aim to decarbonize the shipping industry by 2050 — all while centering a just and equitable transition. While the measures have been criticized by both those who want a more and less ambitious plan, they represent meaningful action that is worth taking now.

So, what is the key to unleashing global climate action for shipping in a way that serves industry, community and environment?

Climate action and a Just and Equitable Transition must be treated as mutually reinforcing. Climate action will not be as effective if we don’t proactively address the fact that benefits and burdens of both climate solutions and climate impacts will not be experienced equally (distributive justice). Climate action will also not be as durable if we don’t listen to and act based on the diverse voices and experience of those most impacted (participatory justice).

The IMO demonstrated an understanding of these principles in October 2024 when concerns about food security arose. The IMO did not dismiss or sweep them under the rug. Member States called a special workshop to find solutions despite highly charged discussions. In so doing, they demonstrated a commitment to both distributive and participatory justice and a willingness to hear directly from those most affected.

The IMO’s Net Zero Framework is a global regulatory framework that includes a fuel standard that accounts for the full lifecycle emissions of marine fuels — from production, throughout the supply chain and up to combustion — and a legally binding greenhouse gas pricing mechanism to help steer international shipping toward net-zero emissions by about 2050. If this hybrid measure is adopted in October, cargo ships will be required to reduce the greenhouse gas intensity of the fuels they used or pay a fee for any emissions beyond a threshold, which will be increasingly stringent over time. Importantly, the billions generated from this system will be invested in the development and deployment of zero- and near-zero emission fuels and technologies and to fairly support the most climate-vulnerable regions — particularly in Small Island Nations and Least Developed Countries — in adapting to the impacts of climate change and in building capacity to be part of this transition.

Action in Context

The shipping sector is one of the most complex to decarbonize. Transporting 90% of the world’s goods, it also accounts for 2% of global greenhouse emissions and significant local air pollution from the fuels the ships use. Action in this sector is essential and the IMO’s current proposed measures represent real progress. While many of us would have liked to see ambition in the current measures that creates a clear trajectory to net zero by 2050, the IMO has proposed several firsts that go far beyond the low hanging fruit. This will have positive ripple effects well beyond shipping. These will be the first global measures that:

1. Directly target the GHG intensities of fuels and require an entire sector to reduce that intensity, sending a strong signal for innovation on advanced zero and near-zero emission fuels and technologies.
2. Utilize limits on climate pollution to directly drive reductions within the shipping sector while also generating revenue to meet investment needs.
3. Will create a fund, replenished annually not with voluntary contributions from government but from a self-sustaining revenue resource.

Opportunities to Strengthen Progress

While the current proposals represent meaningful action and progress there is significant opportunity to strengthen the current measures and set the groundwork for greater ambition in the future. Much of the opportunity to strengthen the current measures will come as the IMO develops the specific implementation guidelines over the coming two to three years, before the measures go into effect.

Here are areas that EDF will focus as we contribute to the discussions and work towards a just and equitable net zero framework:

1. Fuels – Decarbonizing shipping depends on responsibly using short-term transition fuels, like biofuels, in ways that don’t cause unintended harm to people or the climate. Ultimately, decarbonizing shipping will also depend on fuels not yet developed, including fuels like green ammonia that are still in the research and development stage. The demand signal that the IMO will send is critical far beyond the shipping sector. It’s especially important that the IMO also focuses on equitable themes like how these new fuels are produced and the climate and local environmental impacts of doing so. Pressure from IMO policies can work in tandem with private sector and government investments to drive further change.
2. Pricing and limiting carbon – The flexible market-based approaches the IMO is pursuing can be effective because they can keep costs in check and create opportunities to increase ambition.  One of the lesser-considered keys to both environmental integrity and equity is transparent and accessible information, an area slated for future negotiation and work. For example: Will countries and observers get enough information to know shippers are meeting their commitments? Will information be hard to access providing advantages to bigger or better resourced countries and shippers?
3. Investment opportunities – Effective revenue investment is about a lot more than just how much money is raised through the Net Zero Framework. While increasing revenue can create benefits, a truly inclusive and representative governing body can push for effective investments that benefit those who need a just and equitable transition most.  Positioning IMO investments to leverage and complement other developments in the sector or private climate investments can also stretch the impact.

Adoption of the Net Zero Framework this fall will be just the start of achieving the industry’s big climate goals and will set the stage to jumpstart future, more ambitious action. Member States at the IMO have shown they have the resolve to tackle some of the most pressing issues affecting one of the hardest to abate global sectors. Now is the time to adopt and send ripples inspiring other industries to act and innovate. A fair chance of change is within reach.