ISWG-GHG 22 has kept the IMO Net-Zero Framework moving forward, but many difficult decisions remain unresolved. For shipowners, that means the direction of travel is clearer than the eventual cost or compliance mechanism. That makes reducing fuel demand one of the few decisions that continues to make sense across almost every outcome.
The latest IMO negotiations on shipping’s Net-Zero Framework ended in London last week with progress in some areas, but plenty still to resolve.
ISWG-GHG 22 brought together almost 1,200 participants from 1–4 September to consider how concerns around the draft amendments to MARPOL Annex VI might be addressed.
The IMO described the discussions as constructive, and the Chair said there was a genuine willingness to make further progress when Member States meet again in November.
That is encouraging but not the same as agreement.The Chair’s own summary probably gives the clearest picture of where things now stand.
The Group reconfirmed the basic GHG Fuel Intensity calculation, reporting and verification architecture. It identified an overall direction for refining the reduction pathway, agreed to continue exploring the compliance mechanisms and, on one of the most difficult questions, agreed to keep working on how concerns around a Fund, Facility or other financial structure might be addressed.
In the Chair’s words, the meeting had effectively “laid out the concepts.”
The job now is to bring those concepts together.
The architecture remains, but the detail is still open
ISWG-GHG 22 did not reopen the entire Net-Zero Framework from first principles.
The GFI architecture remains in play. The 2023 IMO GHG Strategy and the objective of net-zero emissions by or around 2050 also continue to frame the negotiations. But important parts of the mechanism are still being worked through.
The reduction pathway may yet change. There are different views on how quickly shipping should be required to reduce GHG intensity in the early years and how steeply that trajectory should tighten later.
The compliance mechanisms are also still under discussion. One of the biggest questions remains: how should the transition be financed? That leaves shipowners with more clarity on direction than on cost.
Fund or Facility is not really the question
Much has been made of whether the financial mechanism should be called a Fund or a Facility. The discussions last week showed that changing the name does not resolve the underlying issue.
The real question is whether there should be a predictable, mandatory system for collecting and redistributing money at all, and, if so, how it should be governed, who should administer it, and where that money should go.
Some Member States argue strongly that such a mechanism is essential to support a just and equitable transition and address disproportionately negative impacts.
Others question centralised, mandatory collection and have raised concerns about governance, legal authority, administrative burden, and whether it is the most effective way to support emissions reductions when suitable fuels are not yet available.
Other possibilities are being discussed as well, including a leaner Facility, direct investment, and arrangements involving existing financial institutions under IMO oversight. So there is clearly more than one potential outcome. For an owner trying to understand future compliance costs, this matters a lot.
The fuel question remains unresolved
Fuel availability, affordability and scalability also featured repeatedly in the discussions.
The final framework must create sufficient momentum to move shipping towards lower-GHG energy sources. At the same time, it has to operate in a market where many of the fuels and much of the infrastructure needed to deliver that transition are still developing.
There are different views over how quickly regulation should create demand and how quickly fuel supply and infrastructure can realistically respond.
Those questions matter when a vessel ordered or retrofitted today could still be operating well into the 2040s or 2050s.
Nobody can yet say with certainty which fuel will dominate, what it will cost, where it will be available or exactly how the final compliance regime will treat it.
“Shipowners are being asked to make long-term investment decisions when some of the most important assumptions around fuel, regulation and cost are still moving. You cannot remove that uncertainty, but you can reduce your exposure to it. Whatever fuel a vessel ends up using, needing less of it is a very good place to start.” John Cooper, CEO, BAR Technologies
Incentives are still being shaped
The discussion around zero- and near-zero-GHG rewards remains open too.
Some delegations supported retaining a dedicated reward mechanism to help close the cost gap for early adopters and provide greater investment certainty.
Others argued that the compliance system itself could provide sufficient incentives.
There was also interest in multipliers and other calculation-based approaches.
What was notable across many of those interventions was the emphasis on technology neutrality and verified well-to-wake GHG performance.
That principle matters beyond the choice of fuel.
A technology-neutral framework should recognise demonstrated reductions in the energy and emissions required to move a ship, rather than favouring one particular route to achieving them.
What does this mean for wind propulsion?
For wind propulsion, the regulatory picture is still being completed.
Earlier IMO work has provided guidance on how energy from wind propulsion systems could be monitored, reported, and verified within the GFI framework.
ISWG-GHG 22 reconfirmed the wider GFI architecture, but the supporting implementation guidelines were not completed. Those documents have now been carried forward to ISWG-GHG 23 in November.
So the direction is becoming clearer, but the detail is not yet settled. And there is an important distinction here.
The eventual regulatory value attached to wind-derived energy may still change. The physical value of reducing fuel consumption does not.
“The regulations will continue to evolve, but the engineering does not change with every meeting. If wind provides part of the propulsive power, the vessel needs less fuel. We can measure that today, and it remains true whatever fuel is in the tank.” Lauren Eatwell, Head of WindWings®, BAR Technologies
With conventional fuel, that delivers a saving today. If a more expensive low- or zero-GHG fuel becomes available tomorrow, less of that fuel needs to be bought.
And if the fuel pathway an owner originally expected turns out not to dominate, wind has not suddenly become obsolete. That reinforces the commercial argument for wind propulsion: it does not require the owner to get every future assumption right.
Reduce the size of the problem
Fuels, carbon pricing, compliance mechanisms and transition finance understandably dominate the IMO negotiations.
But there is another side to the equation. How much energy will shipping actually need?
Every tonne of fuel that does not have to be bought and consumed today represents a potential operating saving.
Every tonne of future fuel that does not have to be produced, distributed, bunkered and consumed reduces the scale and potentially the cost of the transition.
That is not an argument against alternative fuels. Shipping will need them. The question is how much of them it will need. For owners, reducing that requirement is increasingly a business and risk-management decision as much as an environmental one.
December still matters
There is a lot of work to do. Delegations have been asked to consult between sessions and to bring forward proposals that show greater convergence.
ISWG-GHG 23 will meet from 23–27 November, followed by MEPC 85 from 30 November to 3 December. The adjourned extraordinary session is scheduled to resume on 4 December, subject to discussions at MEPC 85.
The Chair has made clear that ISWG-GHG 23 will need to move beyond laying out the concepts and start bringing them together.
So December still matters enormously.
But shipowners cannot wait for every political and technical question to be resolved before deciding where to invest. The IMO negotiations continue to debate how shipping should pay for and manage the transition.
Owners also need to consider how much of that transition they actually need to buy.
Using less fuel remains one of the few decisions that makes commercial sense across almost every outcome now being discussed. Wind propulsion deserves to be at the front of that conversation.
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