Global Shipping Climate Deal Edges Closer: Key Developments and Implications

US opposition blocks shipping climate agreement at IMO

The International Maritime Organization’s plan to cut greenhouse gas emissions from ships has hit a wall. In October 2025, the US led opposition that stopped formal adoption of the Net-Zero Framework. This happened despite earlier approvals and momentum from measures already in place, such as the Carbon Intensity Indicator.

For UK businesses that import or export goods, this matters. Shipping moves most of the world’s trade. Delays in climate rules create uncertainty around future costs and compliance requirements. They also affect investment decisions in cleaner fuels and technologies.

International shipping produces about 3% of global carbon dioxide emissions. That makes it a significant contributor to climate change. The sector operates across borders, which means individual countries cannot regulate it alone. Therefore, the IMO sets global standards that apply to vessels worldwide.

How shipping emissions rules have developed since 2018

The IMO adopted its Initial Strategy on Reduction of GHG Emissions from Ships in April 2018. The strategy set targets for a 40% reduction in carbon intensity by 2030 and 70% by 2050, measured against 2008 levels. It also aimed for at least 50% total greenhouse gas cuts by 2050, with full decarbonization to follow as soon as possible.

In 2023, the IMO revised these targets. The updated strategy strengthened the ambition to reach net zero emissions by or around 2050. This revision reflected growing pressure from climate science and campaigning groups. However, turning ambition into binding rules requires member states to agree on detailed measures.

Meanwhile, the Carbon Intensity Indicator became mandatory in 2023. The CII applies to ships over 5,000 gross tonnage. It rates each vessel’s operational carbon intensity annually. Ships must improve efficiency through better operations, alternative fuels, or new technologies. Regulators monitor compliance using frameworks such as the EU’s Monitoring, Reporting, and Verification system for carbon dioxide emissions in European waters.

Consequently, shipping companies face penalties if their vessels perform poorly under CII ratings. BIMCO introduced a CII Clause in November 2022 for charter parties. This clause allocates compliance risks between ship owners and charterers. It shows how the industry is already adapting to regulatory pressure.

April 2025 committee meeting approved draft framework

At MEPC 83, held from 7 to 11 April 2025, the Marine Environment Protection Committee approved draft amendments to MARPOL Annex VI. These amendments introduced two key measures: a global fuel standard and a greenhouse gas pricing mechanism.

The global fuel standard reduces greenhouse gas fuel intensity through well-to-wake calculations. This means emissions are counted from fuel production through to combustion. The pricing mechanism rewards ships that over-comply by issuing surplus units for trading. Partially compliant ships pay a levy of $100 per tonne of carbon dioxide equivalent. Non-compliant vessels face higher costs for remedial units.

These measures target large ships over 5,000 gross tonnage, which account for 85% of shipping emissions. The plan was for entry into force in 2027 or 2028. The committee voted 63 in favor and 16 against, which sent the draft for a six-month review period before final adoption in October 2025.

Arsenio Dominguez, the IMO Secretary-General, stated that the approval represented another significant step in collective efforts to combat climate change and modernize shipping. There was genuine optimism that the framework would pass into law later in the year.

October meeting saw US-led opposition halt adoption

In October 2025, member states gathered for MEPC/ES.2 to finalize the Net-Zero Framework. However, a US-led group blocked adoption. This was unexpected given the earlier vote and the momentum behind the measures.

The framework included pressure for a 17% emissions cut by 2028 on large ships, including cruise vessels. Supporters argued this would drive investment in cleaner fuels and technologies. Nevertheless, the US and allied states raised concerns, possibly linked to debates over Common But Differentiated Responsibilities. This principle suggests developed and developing nations should have different obligations based on historical emissions and economic capacity.

Without adoption, the pricing mechanism and fuel standard remain in limbo. John Maggs from the Clean Shipping Coalition said the IMO had squandered an important opportunity to tackle shipping’s contribution to climate breakdown. He urged the organization to strengthen the CII instead, as an alternative path to progress.

Ships under 5,000 gross tonnage remain exempt from these measures. This exemption could increase emissions from smaller vessels if larger ships are regulated more strictly. The delay also means uncertainty persists for companies planning green investments.

What this means for UK businesses that rely on shipping

Most UK trade moves by sea. Delays in global shipping rules create planning difficulties. Businesses cannot forecast future costs for freight and compliance. This makes it harder to budget for supply chain changes or to commit to long-term contracts with shipping companies.

Moreover, the lack of a pricing mechanism means there is less financial pressure to switch to low-emission fuels. Shipping companies may continue using conventional fuels rather than investing in alternatives such as e-fuels, biofuels, or wind-assisted propulsion. For UK importers and exporters, this could mean slower progress toward supply chain decarbonization.

The CII remains in place and is driving some efficiency improvements. Shipping companies are adjusting operations, adopting liquefied natural gas, and exploring other technologies. However, the CII alone is not sufficient to meet the 2030 targets. It focuses on operational efficiency rather than fuel switching, which is necessary for deep emissions cuts.

Furthermore, businesses that supply the maritime sector face uncertainty. Companies developing alternative fuels or new propulsion systems need regulatory certainty to justify investment. Without clear rules and timelines, projects may stall or struggle to secure financing.

EU regulations add another layer. The EU’s Monitoring, Reporting, and Verification framework already applies to ships calling at European ports. UK businesses trading with the EU must ensure their shipping partners comply with these rules. The EU is also developing its own carbon pricing for shipping through the Emissions Trading System. Therefore, even without global agreement, European routes will face additional costs.

Six key points about the stalled shipping climate framework

• The IMO’s Net-Zero Framework aimed to introduce a global fuel standard and a $100 per tonne carbon levy for partially compliant ships from 2027 or 2028.
• In April 2025, the Marine Environment Protection Committee approved the draft framework with 63 votes in favor and 16 against.
• US-led opposition in October 2025 blocked formal adoption, delaying the measures indefinitely.
• The Carbon Intensity Indicator remains mandatory for ships over 5,000 gross tonnage, with annual ratings and penalties for poor performance.
• Ships under 5,000 gross tonnage are exempt from both the CII and the proposed framework, covering 15% of shipping emissions.
• The delay creates uncertainty for businesses planning supply chain decarbonization and for companies investing in alternative maritime fuels.

Practical steps UK businesses should consider now

Despite the setback, businesses should continue preparing for stricter shipping rules. Regulations will eventually tighten, whether through the IMO or regional systems such as the EU Emissions Trading System. Early preparation reduces future compliance costs and protects supply chain resilience.

First, review your shipping partners’ CII ratings. These ratings are public and provide a clear indicator of a vessel’s efficiency. Choosing shipping companies with better ratings reduces the risk of future cost increases and aligns with your own carbon reporting obligations. Many UK businesses already report emissions under schemes such as the Streamlined Energy and Carbon Reporting framework or as part of carbon reduction programs for public sector suppliers.

Second, consider the implications for Scope 3 emissions. Shipping forms part of your supply chain emissions, which fall under Scope 3 in carbon accounting. If you report emissions to investors, customers, or as part of tender requirements, you need data on freight emissions. Building relationships with shipping companies that provide transparent emissions data will make reporting easier.

Third, explore options for greener shipping routes or methods. Some companies are experimenting with wind-assisted propulsion or slower steaming to cut fuel use. Others are investing in biofuels or synthetic fuels, though these remain expensive. Even small changes, such as consolidating shipments to reduce the number of voyages, can lower emissions and costs.

Fourth, monitor developments in EU regulations. The EU Emissions Trading System is expanding to cover maritime transport. Ships calling at EU ports will need to surrender allowances for their emissions. This will increase costs for routes involving UK-EU trade. UK businesses should factor these costs into freight budgets and contract negotiations.

Finally, engage with your freight forwarders and logistics providers. They often have insights into regulatory changes and can help identify lower-emission options. Some forwarders now offer carbon reporting tools or preferential rates for greener shipping choices. Building these conversations into procurement decisions helps manage risk and supports sustainable procurement strategies.

Training and skills for managing shipping emissions

Understanding shipping emissions and compliance is becoming a necessary skill for procurement and supply chain teams. As regulations evolve, businesses need staff who can interpret rules, assess supplier performance, and manage reporting requirements.

Training programs on Scope 3 emissions and supply chain decarbonization can help. These programs cover carbon accounting, data collection, and compliance with frameworks such as the Greenhouse Gas Protocol. They also address practical topics such as engaging suppliers and evaluating alternative transport modes. For businesses looking to build internal capacity, structured training on carbon reporting and supply chain sustainability provides a solid foundation.

Supply chain teams should also understand how CII ratings work and what they mean for contract negotiations. Knowing how to interpret these ratings and factor them into supplier selection gives businesses a competitive edge. It also reduces the risk of cost shocks when regulations tighten.

Where to find authoritative guidance on shipping emissions

The International Maritime Organization’s greenhouse gas emissions page provides official updates on regulatory developments, including meeting outcomes and adopted measures.

The UK Department for Transport publishes guidance on maritime decarbonization and the UK’s position on international shipping rules. This is available on the gov.uk transport section.

For businesses reporting emissions, the Greenhouse Gas Protocol offers the standard methodology for calculating Scope 3 emissions from freight and logistics.

The UK’s Streamlined Energy and Carbon Reporting regulations on legislation.gov.uk set out reporting requirements for large companies and quoted businesses.

Trade associations such as the Chamber of Shipping provide sector-specific updates and practical guidance for UK maritime businesses.