The EU is showing how regional maritime rules can support a global framework at the IMO

In April 2025, world leaders at the International Maritime Organization (IMO) reached an agreement on a landmark global regulation, the Net-Zero Framework (NZF). The NZF aims to steer global shipping towards net-zero emissions by 2050, in a fair and sustainable manner. Given that shipping is responsible for approximately 3% of global emissions, this framework could be a significant step in addressing the climate crisis.

If implemented, the NZF would establish common global targets for reducing the carbon intensity of marine fuels, and for the first time, introduce meaningful carbon pricing for a global industry. By imposing fees on emissions that surpass agreed targets, it would generate annual revenues of $10-15 billion. These funds would be used to support clean fuels and the industry's transition in developing nations, such as investments in clean ports, zero-emission ships, and renewable energy production.

Although the NZF alone may not be sufficient to meet the rapid emission reduction targets agreed upon by countries, it establishes a crucial global standard for an industry that has largely been exempt from climate regulations. In October 2025, the IMO's failure to adopt the NZF came as a major disappointment not only for the shipping industry, which now lacks vital investment clarity and certainty, but also for the world's most vulnerable states.

These states often struggle with financing their energy transition and frequently face the most severe impacts of climate change. One of the primary arguments against the NZF was that regional carbon pricing measures, such as the EU's ETS, already exist. These countries, led by the US and Saudi Arabia, argued that a global regulation would impose an undue burden on the shipping industry.

The EU, however, has proposed changes to its ETS for shipping, which could pave the way for both global and regional regulation to support each other. The EU has outlined three key points that could facilitate this cooperation. Firstly, there will be no double payment for the same emissions. The EU is committed to preventing ships sailing internationally from having to pay twice for the same emissions under the EU ETS and the NZF.

This overlap is currently limited to around 15% of relevant emissions. Secondly, the focus will be on alignment rather than regression. Since the NZF is insufficient to meet the IMO's climate targets, regional efforts are needed to bridge these gaps. The EU has proposed a "ETS as a service" that would enable EU trade partners to raise revenues from their own 50% of emissions through the EU's existing system, without the need to establish a new ETS.

Thirdly, the ETS should promote an equitable transition. Previously, funds were only allocated to European projects. Now, around €100 million per year will be specifically set aside to fund shipping decarbonisation in Small Island Developing States (SIDS) and Least Developed Countries (LDCs). Additionally, countries involved in the "ETS as a service" could also receive subsidies for green investments, further encouraging international cooperation.

The EU's revised ETS for shipping aims to enable both global and regional regulations to coexist and reinforce each other. This could lead to a more sustainable shipping industry while supporting vulnerable nations in their efforts to transition to cleaner energy sources.