IMO Net-Zero Framework: fuel cost and carbon pricing
Modelling fuel choices and carbon costs under the IMO 2030 mid-term framework.
In 2025, the IMO approved mid-term measures that introduced a new Net-Zero Framework for international shipping, placing strong emphasis on absolute emissions reduction and carbon pricing. SFOC analyzed the economic implications of this policy shift across three scenarios, highlighting the need for targeted government intervention and a credible compensation mechanism to accelerate the early transition in the sector.
Key Recommendations
This document outlines key recommendations for fuel transitions in achieving net-zero greenhouse gas (GHG) emissions in the international shipping sector by 2050, emphasizing cost-effective strategies and evidence-based policymaking:
- Financial support measures to incentivize early consumption of e-fuels
- Internalizing the price of carbon within the fuel price of conventional fuels
- Higher interim targets to ensure the international shipping sector remains on track to reach net-zero emissions by 2050
Methodology
A cost optimization model was employed to analyse maritime fuel consumption, fuel costs, and the shadow price of carbon in multiple scenarios. Comparative analysis of the results offers actionable insights to guide policy formulation and investment strategies critical to meeting the sector's decarbonization goals.
Policy Implications
The IMO Net-Zero Framework marks a paradigm shift: shipping must now manage total greenhouse gas emissions, not merely energy efficiency. The dual-rate pricing system creates real financial incentives for early fuel transition, but targeted policy support is needed to avoid disproportionate cost burdens on developing nations and small operators.