The IMO Net Zero Framework (NZF), agreed upon in 2025, is recognized as the best solution for achieving the 2023 greenhouse gas (GHG) reduction strategy. As the MEPC 85 meeting approaches, negotiations regarding the formation of this framework have significantly increased, and several proposals have been put forward in this regard.
Sensitivity Analyses and Their Impacts
The UCL Research Center and the Rocky Mountain Institute have conducted sensitivity analyses on the structural elements of the NZF. These analyses focused on GFI pathways and compliance prices (corrective units or direct partnerships) and measured the impact of various ZNZ fuel reward schemes. The results show that GFI pathways with higher ambition and higher RU prices lead to reduced greenhouse gas emissions.
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Research indicates that even slightly loosening the GFI pathway leads to increased greenhouse gas emissions in the short term. This pathway effectively determines the allowable emissions and is indeed one of the main pillars of this policy. If the prices of corrective units decrease, the costs of emission reductions will rapidly increase, negatively impacting governments.
The Role of Pricing and Direct Partnerships
Corrective units serve as a benchmark to encourage investment in alternative energies. The higher the RU price, the more investment there will be in emission reduction solutions. In this regard, differentiated pricing for fuel types (electronic and biofuels) is essential to achieve climate goals.
We examined various scenarios where the "updated" prices (RU1 = $100 and RU2 = $380) are kept constant, versus a scenario where the RU2 price starts at $380 and increases over time. The results showed that only by increasing the RU price does investment and energy transition continue, leading to reduced emission costs.
Direct partnerships have been defined as an alternative to corrective units, where shipping companies pay for eligible projects. However, companies may reclaim their share if they have a financial stake in the project, a situation referred to as "leakage." Studies indicate that this scenario will lead to a significant increase in greenhouse gas emissions compared to the NZF framework.
Ultimately, the net zero framework as it stands includes elements that lead to emission reductions, lower reduction costs, and sustainable revenues for ZNZ and JET. Deviating from the agreements made could jeopardize the overall performance of this framework.
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