Liberia Proposes Net Zero Shift for Shipping Emissions

Liberia tables revised maritime emissions plan at IMO

Liberia has submitted a revised maritime emissions proposal to the International Maritime Organization ahead of its 84th Marine Environment Protection Committee session. The plan, co-sponsored by Argentina and Panama, removes financial penalties and adjusts reduction targets based on fuel availability. It represents a significant departure from the draft Net-Zero Framework that has dominated discussions for over a decade.

The submission arrives as global shipping faces mounting pressure to cut greenhouse gas emissions while navigating political divisions. According to documents filed on 4 March 2026, the proposal introduces market-based incentives rather than compliance fines. It also sets emissions targets that shift according to the commercial viability of alternative fuels.

This approach has gained backing from Gulf states previously opposed to the original framework. However, environmental groups argue it could weaken commitments made under the IMO’s 2023 greenhouse gas strategy. The outcome will affect how thousands of vessels manage emissions, what fuels they adopt, and how quickly the sector moves toward decarbonisation.

What the original Net-Zero Framework proposed

The IMO’s draft Net-Zero Framework aimed to reduce shipping emissions by 20 to 30 percent by 2030 and 70 to 80 percent by 2040, measured against 2008 levels. The plan targeted net-zero emissions around 2050. It applied to ships over 5,000 gross tonnage, which account for roughly 90 percent of maritime carbon dioxide output.

Central to the framework was a global fuel standard. This standard would require progressively lower lifecycle greenhouse gas intensity, measured from fuel production through to combustion. Ships exceeding the standard would face financial penalties. Revenue from these penalties would fund an IMO-administered account supporting infrastructure development and technology transfer, particularly for developing nations.

The framework passed a committee vote in April 2025 with 63 in favour, 16 against, and 24 abstentions from 103 eligible member states. Nevertheless, a narrow vote in October 2025 delayed formal adoption by 57 votes to 49. Opposition intensified after January 2025, when the United States characterised the framework as a neo-colonial measure and threatened trade sanctions. Countries including Algeria, Bahrain, Iraq, Kuwait, Russia, Saudi Arabia, Somalia, and the UAE joined calls for a technology-neutral alternative without carbon pricing.

How Liberia’s proposal differs from the draft framework

The revised proposal retains emissions reduction targets but removes the IMO fund and associated penalties. Instead, it introduces a Global Fuel Intensity framework that adjusts targets based on the uptake of fuels costing no more than 15 percent above conventional marine fuel averages. Consequently, the trajectory responds to market conditions rather than fixed deadlines.

Liberia’s plan supports a wider range of fuels, including liquefied natural gas, biofuels, and any energy source achieving well-to-wake reductions. Onboard carbon capture qualifies under this definition. The proposal establishes a 30-year linear reduction pathway from current fuels to the cleanest commercially available options.

Compliance flexibility comes through credit trading, banking, and borrowing mechanisms. Shipowners exceeding intensity targets can bank credits for future use or trade them with operators falling short. This removes the threat of fines and eliminates the redistribution mechanism that would have directed penalty revenues to the IMO fund.

Furthermore, the proposal explicitly supports transitional fuels that the original framework would have discouraged. Proponents argue this recognises supply chain realities and cost barriers facing many operators, particularly those running smaller fleets or tramp vessels without long-term charter security.

Why three former supporters changed their position

Liberia, Argentina, and Panama previously backed the Net-Zero Framework. Their shift reflects commercial and political pressures within their shipping registries. Liberia operates the world’s second-largest ship registry by tonnage. Panama holds the largest. Both registries serve owners seeking cost certainty and regulatory predictability.

Opposition to the original framework centred on the IMO fund, which many shipowners characterised as a tax on operations. Critics argued the fund lacked transparent governance and provided no direct benefit to those paying into it. Small operators and tramp vessel owners expressed concern that penalties would disproportionately affect them, particularly during periods when compliant fuels were unavailable or prohibitively expensive.

Additionally, the fund mechanism faced questions about how revenues would be allocated. Developing nations expected support for port infrastructure and just transition measures. Meanwhile, major shipping nations worried that funds might be distributed without regard to maritime sector needs or technological readiness.

Political opposition from the United States added urgency to finding an alternative. Threats of trade sanctions raised the prospect of fragmented global regulation, which registries like Liberia and Panama view as commercially damaging. Their revised proposal attempts to bridge the gap between ambitious emissions targets and the political realities facing IMO member states.

Reactions from industry bodies and environmental groups

Saudi Arabia and other Gulf states have signalled support for the revised proposal. These nations produce and export liquefied natural gas, which qualifies as a transitional fuel under the new framework. US Deputy Assistant Secretary Marco Sylvester has not yet publicly responded, though delegates at the IMO are closely watching for indications of American policy direction.

The International Bunker Industry Association has called for robust implementation rules if any framework is adopted. IBIA representatives stress that credit trading and banking mechanisms require transparent oversight to prevent market manipulation or regulatory collapse. They also highlight the need for fuel quality standards that align with lifecycle emissions calculations.

Environmental organisations have responded critically. The Clean Shipping Coalition argues the proposal jeopardises commitments made in the IMO’s 2023 greenhouse gas strategy. According to the coalition, adjusting targets based on fuel affordability locks in fossil fuel use and undermines investment in zero-emission technologies. Small island states, including Fiji and Kiribati, have expressed concern that removing the IMO fund eliminates financial support for nations facing disproportionate climate impacts from shipping emissions.

A study from the UCL Energy Institute suggests that aligning with US preferences may produce a low-ambition outcome that fails to scale clean fuel production. Researchers note that delaying zero-emission mandates reduces market signals needed to justify infrastructure investment. Lloyd’s List described the proposal as a tactical move to demonstrate flexibility toward the United States while maintaining some level of global coordination.

Commercial implications for UK businesses

UK businesses operating in maritime supply chains face direct consequences from either outcome at the 84th Marine Environment Protection Committee session. Companies managing their own vessels, chartering ships, or exporting goods by sea will need to account for changing fuel costs and compliance requirements. The choice between the original Net-Zero Framework and the revised proposal affects both immediate operational expenses and medium-term capital investment decisions.

If the revised proposal gains approval, shipowners can expect greater flexibility in fuel choice and compliance timing. This may benefit operators managing mixed fleets or those serving routes where zero-emission fuels are not yet available. However, it also extends the period during which fuel costs remain uncertain. Credit trading mechanisms introduce new market variables that procurement teams will need to monitor and manage.

For businesses tendering for public sector contracts, the implications are more complex. Procurement Policy Note 06/21 requires suppliers to publish carbon reduction plans and demonstrate net-zero commitments. If the maritime sector adopts a framework permitting prolonged use of transitional fuels, supply chain emissions reporting becomes harder to align with these requirements. Companies may face questions about Scope 3 emissions from shipping partners who rely on liquefied natural gas or biofuels rather than zero-emission alternatives.

Conversely, if the original framework prevails with its fund mechanism and stricter fuel standards, shipping costs are likely to rise more sharply in the short term. Freight rate volatility could increase as operators pass through compliance costs. Businesses with high-volume imports or exports may need to renegotiate contracts or adjust pricing models. Additionally, the fund mechanism introduces potential indirect benefits through infrastructure development that could eventually lower the cost of clean fuels.

Insurance and financing arrangements may also shift depending on the outcome. Banks and insurers are increasingly factoring climate risk into underwriting decisions. A weaker global framework could extend the period during which vessels are considered transition assets, affecting loan terms and insurance premiums. Conversely, a stronger framework with clear zero-emission targets may accelerate the depreciation of conventionally fueled vessels, influencing asset values and leasing arrangements.

UK manufacturers exporting to or importing from markets with stringent sustainability requirements face additional considerations. The European Union’s Carbon Border Adjustment Mechanism includes imported goods, and future iterations may account for maritime transport emissions. If the IMO adopts a framework that permits higher lifecycle emissions, UK exporters could face carbon costs when selling into the EU that domestic EU producers do not incur.

What MEPC 84 might decide

The 84th session of the Marine Environment Protection Committee will convene from 27 April to 1 May 2026. Delegates will consider the revised Liberia proposal alongside the existing draft Net-Zero Framework. Several outcomes are possible, each with distinct implications for global shipping regulation.

First, the committee could adopt the Liberia proposal with modifications. This would represent a compromise between the original framework’s ambition and the political opposition it has faced. Adoption would likely require further refinement of credit trading rules, lifecycle emissions calculation methods, and fuel eligibility criteria. It would also require agreement on how to phase out the most carbon-intensive fuels without triggering renewed opposition from producer nations.

Second, the committee could reject both proposals and extend discussions into a future session. This outcome becomes more likely if member states cannot agree on core principles such as whether to include financial mechanisms, how to define technology neutrality, or what role developing nations should play in shaping the framework. Extended negotiations would prolong regulatory uncertainty but might ultimately produce a more durable consensus.

Third, the committee could reaffirm the original Net-Zero Framework with minor amendments to address specific objections. This would signal that the majority of member states prioritise binding emissions reductions over political accommodation with the United States and Gulf nations. However, it risks deepening divisions and could lead to fragmented implementation if major maritime nations refuse to comply.

Finally, the committee could adopt a hybrid approach that incorporates elements of both proposals. For example, it might retain emissions intensity targets from the original framework while introducing credit trading mechanisms and removing the IMO fund. Such a compromise could attract broader support but would require careful drafting to avoid creating loopholes or undermining enforceability.

Regardless of the outcome, member states are unlikely to finalise implementation regulations at this session. Technical details such as fuel testing protocols, credit market oversight, and enforcement mechanisms will require additional meetings. This means businesses should expect continued regulatory development throughout 2026 and into 2027.

Five key points for UK businesses to consider

• The International Maritime Organization will decide between competing emissions frameworks at its April-May 2026 session, affecting fuel costs and compliance requirements for UK businesses using maritime transport.
• Liberia’s revised proposal removes financial penalties and allows credit trading, potentially lowering short-term costs but extending the timeline for zero-emission fuel adoption.
• Public sector suppliers must align shipping emissions with Procurement Policy Note 06/21 carbon reduction requirements, which may become harder under a framework permitting transitional fuels.
• A weaker global framework could increase EU Carbon Border Adjustment Mechanism costs for UK exporters whose goods arrive by ship using higher-emission fuels.
• Regulatory uncertainty will continue through 2026 as implementation rules are developed, meaning businesses should monitor developments rather than committing to specific compliance strategies now.

Planning for regulatory uncertainty in maritime emissions

UK businesses should assess their exposure to maritime emissions regulation before the IMO reaches a decision. Companies with high shipping volumes or long supply chains need to understand which vessels serve their routes, what fuels those vessels currently use, and how different regulatory outcomes would affect freight costs. This assessment forms the basis for scenario planning that accounts for both possible IMO frameworks.

Procurement teams should engage with freight forwarders and shipping lines to understand their decarbonisation strategies. Many carriers have announced fleet renewal plans or alternative fuel investments. However, these commitments vary significantly in ambition and timeline. Businesses should ask specific questions about fuel transition plans, credit purchase strategies if the Liberia proposal succeeds, and how costs will be allocated under different regulatory scenarios.

For companies preparing carbon reduction plans to meet public sector tender requirements, the focus should remain on Scope 3 emissions transparency rather than waiting for maritime regulation to settle. Our compliance services for carbon reporting help businesses map supply chain emissions and identify reduction opportunities regardless of which IMO framework ultimately applies. Demonstrating active management of shipping emissions through carrier selection criteria and route optimisation shows procurement evaluators that your business takes supply chain decarbonisation seriously.

Businesses should also consider how maritime regulation intersects with other sustainability requirements they face. The European Union’s Corporate Sustainability Reporting Directive, the UK’s Streamlined Energy and Carbon Reporting requirements, and various industry-specific standards all require emissions disclosure. Maritime transport often represents a significant portion of Scope 3 emissions for manufacturers and retailers. Understanding how IMO regulation will affect these disclosures helps businesses avoid surprises when reporting deadlines arrive.

Finally, businesses should recognise that regulatory uncertainty creates both risks and opportunities. Companies that invest early in understanding maritime emissions, engage proactively with carriers on fuel choice, and build flexibility into logistics contracts will be better positioned regardless of the outcome. Those that delay action until regulation is finalised may face higher costs and fewer options when compliance requirements take effect.

Where to find authoritative information on maritime emissions regulation

The International Maritime Organization publishes meeting documents, member state submissions, and updates on the Marine Environment Protection Committee discussions. These resources provide the most direct source of information on regulatory developments.

The UK Department for Transport represents British interests at IMO negotiations and publishes policy positions on maritime decarbonisation. Businesses can monitor UK government responses to proposed frameworks through departmental announcements.

For guidance on carbon reporting and supply chain emissions, the Greenhouse Gas Protocol provides internationally recognised standards for calculating and disclosing emissions from maritime transport and other sources.

Trade associations such as the UK Chamber of Shipping offer sector-specific perspectives on how maritime regulation affects British businesses and provide updates on implementation timelines.

Businesses seeking support with carbon reduction planning, Scope 3 emissions mapping, or public sector tender preparation can access resources through the SBS Academy training programmes, which cover practical approaches to managing supply chain emissions under evolving regulatory requirements.