IMO’s Shipping Climate Rules Promise Justice but Leave the Money Rules Unwritten

International shipping carries more than 80 percent of world merchandise trade by volume and produces roughly 3 percent of global greenhouse gas emissions, so the rules now being negotiated to decarbonize the sector will reshape freight costs, fuel markets and port economies worldwide. A new analysis published in Frontiers in Marine Sciences examines the draft IMO Net-Zero Framework approved by the Marine Environment Protection Committee at its eighty-third session in April 2025 and reaches an uncomfortable conclusion: the framework’s just-transition machinery, though written in mandatory treaty language, would leave its most consequential distributive decisions to governing provisions that have not yet been adopted. The draft amendments were adjourned rather than adopted at an extraordinary committee session in October 2025, and the study evaluates what would happen if the approved text were eventually brought into force.

The draft framework would add a new chapter 5 to Annex VI of the MARPOL Convention, combining a goal-based marine fuel greenhouse gas intensity standard, an emissions-pricing mechanism and an IMO Net-Zero Fund. Regulation 31 would place “a just and equitable transition” directly in the chapter’s operative goal, which matters legally: under the Vienna Convention on the Law of Treaties, subsequent provisions on fund disbursement and technology transfer would be interpreted in light of that stated purpose. Regulations 40 through 43 would establish the Fund and its Governing Board, a list of revenue-disbursement purposes, technical-cooperation obligations and a standalone food-security provision. Taken together, the author argues, this is a concentrated treaty-level architecture rather than a restatement of political principle.

The problem is what the text does not fix. Regulation 41 uses the mandatory formulation “shall disburse,” yet regulation 40(4) delegates beneficiary eligibility, financing mechanisms, operating procedures and the allocation of revenue among purposes to governing provisions still to be adopted. The phrase “allocating sufficient revenue” carries no quantitative benchmark, minimum share or comparator, and “adequate representation” of developing countries on the Governing Board specifies no seats or voting rules. A potential beneficiary state could invoke the treaty in committee proceedings, but could not establish from the text alone any entitlement to a particular amount, or readily determine whether an allocation breached it. The obligation exists in form; its performance depends on rules that do not yet exist.

The asymmetry in deadlines sharpens the concern. The draft sets firm dates for the revenue-collection side: certification schemes must be listed by 1 March 2027, ships must open Registry accounts by 1 October 2027 and pay annual fees from 30 June 2028, and a mechanism to review remedial-unit prices from 2031 must exist by 1 January 2028. No deadline attaches to the governing provisions that would determine how money is distributed. Chapter 5 could therefore become fully operational as a collection mechanism before anyone has decided who receives the revenue, meaning payment obligations might arise before allocation rules are in place.

Food security illustrates the disconnect most starkly. Regulation 43 requires the committee to address, including by avoiding, remedying and mitigating, disproportionately negative impacts on food security and to keep those impacts under continuous review, language notably stronger than elsewhere in the chapter. But regulation 41(1)(2)(v), which lists addressing such impacts among the Fund’s purposes, qualifies it with “as appropriate” — the only one of five purposes carrying that qualifier. No trigger, review cycle or remedy links a finding under regulation 43 to disbursement under regulation 41. Even a formal finding of serious harm would not automatically release funding.

The distributional stakes are substantial. The IMO-commissioned Comprehensive Impact Assessment finds that least developed countries and small island developing states see the largest gross domestic product impact of any group when measures are modelled without revenue disbursement, but smaller impacts, in some scenarios positive, when a levy is combined with an intensity requirement and revenues are disbursed. UNCTAD scenario analysis indicates shipping-cost shocks reduce real GDP disproportionately in SIDS and LDCs and pose a significant food-security risk. The maritime transport margin as a share of import prices is highest for agriculture, fishing and mining, and the ratio for developing economies is nearly twice that for developed economies. Whether vulnerable states are compensated, in other words, turns entirely on the deferred allocation decisions.

Port infrastructure and labour face their own timing traps. Green-fuel bunkering is expected to concentrate initially in a few hub ports following route density rather than development need, and the draft tightens the zero-or-near-zero fuel threshold from 19.0 to 14.0 grams of carbon dioxide equivalent per megajoule in 2035, so ports investing in transitional fuels could face exclusion within a decade. Seafarer training presents a parallel mismatch: ammonia, methanol and hydrogen each carry distinct toxicity and flammability hazards requiring new handling and emergency-response skills, while the STCW convention has been comprehensively revised only twice since 1984. Fund disbursement could not begin until governing provisions were adopted, and neither the revenue share for seafarer transition nor its timing is fixed in the text.

The study also compares four alternative amendment proposals circulated in 2026 by Liberia, Brazil, Tuvalu, and a joint group of Australia, Canada, South Africa and the United Kingdom. Tuvalu’s text sets the strongest revenue parameters — a Tier 1 remedial-unit price of US$300 per tonne of CO2-equivalent and no surplus-unit mechanism — but the same high price that fills the Fund also raises landed costs most sharply for import-dependent island economies. Liberia’s proposal removes the Fund, the disbursement purposes and the food-security provision altogether, reducing the just transition to voluntary contributions, and could allow a major open registry to retain compliance payments as domestic revenue. Brazil’s text aligns its two compliance targets for 2029 and 2030, which eliminates the Tier 1 pricing band — and thus most Fund income — during precisely the years when port and training investments need early finance. None of the three proposals that retain the Fund modifies the delegated structure, sets allocation shares or imposes a deadline for the governing provisions.

The analysis proposes five reforms. Minimum allocation shares should be written into the governing provisions, with a subsidiary floor reserved for LDCs and SIDS, following the precedent of the Green Climate Fund, which balances its 24-member board equally between developed and developing countries and directs at least half of adaptation finance to particularly vulnerable states. The Governing Board’s composition should specify dedicated LDC and SIDS seats and qualified-majority voting for allocation decisions, since research on climate funds shows formal participation does not guarantee substantive influence. A measurable monitoring trigger should connect food-security findings to priority disbursement, with the “as appropriate” qualifier deleted from the regulatory text. Technology-transfer finance should be tied to technical-assistance requests made under regulation 42, creating a traceable record. Finally, regulation 40(3) should set a deadline for the governing provisions — preceding the first payment obligations, with interim rules applying automatically if the deadline is missed — and the five-year effectiveness review should extend beyond mitigation rules to assess whether the Fund actually improved capacity, training, infrastructure and food security.

The article’s central conclusion is that the operationalization gap is not primarily a drafting problem but a political choice to defer the decisions with the greatest distributive significance. Treating developing countries as a single category also obscures real divergence: Tuvalu, a small island state, seeks the highest carbon price to maximize redistributable revenue, while Liberia, a least developed country and major open registry, would dismantle the financing mechanism entirely. States’ positions differ according to their roles as registry operators, labour suppliers, food importers or potential fuel producers, and the eligibility rules still to be written will have to distinguish among those channels. For developing countries, the author argues, the existence of the just-transition provisions would be necessary; their operationalization is what will decide whether shipping decarbonization is shared or borne unevenly.

Subject of Research: Governance gaps in the draft IMO Net-Zero Framework's just-transition provisions for developing countries

Article Title: Implementing a just transition under the IMO Net-Zero Framework: governance gaps and implications for developing countries

Article References: Hu, J. (2026). Implementing a just transition under the IMO Net-Zero Framework: governance gaps and implications for developing countries. Frontiers in Marine Science, 13, 1970252. https://doi.org/10.3389/fmars.2026.1970252

Image Credits: AI Generated

DOI: 10.3389/fmars.2026.1970252

Keywords: IMO Net-Zero Framework, MARPOL Annex VI, just transition, shipping decarbonization, developing countries, SIDS, LDCs, IMO Net-Zero Fund, food security, climate finance, governance gaps, MEPC