‘Devil will be in the detail’ of new IMO Net-Zero Framework, says law firm Reed Smith

“As the IMO releases details of how its Net-Zero Framework will operate in its first monitoring year in 2028, it is clear that the devil will be in the detail,” says Nick Austin, partner in Reed Smith’s Transportation Industry Group.

“Whilst superficially resembling the EU’s focus on well-to-wake GHG intensity in its FuelEU Maritime regulation, the IMO’s approach will be more complicated. It would introduce two tiers of compliance and differential pricing of ‘remedial units’ to ensure vessel compliance. Owners and charterers alike will, when implementation becomes clearer, need to work together to understand the impact of the framework on their shipping operations, including the legal allocation of costs and risks in their shipping contracts.

“I have been asked by three clients in the last week whether the IMO’s new Net-Zero Framework will replace or override the existing CII, EU ETS and FuelEU Maritime rules that the industry has been getting to grips with in recent years. At the moment, the short answer is no. The new framework would supplement the existing regulations in this space and, being a creation of the IMO, has no immediate impact on the EU’s initiatives around ETS and FuelEU.

“However, time will tell if the EU’s own rules will be amended to take into account the IMO’s proposed regime to avoid duplication. It is also worth remembering that the IMO’s other creation, the Carbon Intensity Indicator (CII), is likely to go undergo revision, possibly extensive, in 2026.

“There has, understandably, been growing industry reaction to the recent unveiling of the IMO’s ambitious Net-Zero Framework. If confirmed in October 2025, this will be a legally binding regime aimed at achieving net-zero GHG emissions from ships by 2050. Although the US withdrew from the negotiations, the framework is notable for keeping open all the alternative fuel “pathways” being explored by the industry as it grapples with reducing GHG emissions. For now at least that includes LNG dual-fuel tonnage which will be a welcome relief to that part of the sector given that LNG-fuelled vessels occupy the largest share, currently making up around two-thirds, of the alternative fuel-capable vessels in the world fleet.”