Fleet Decarbonisation

The strategic framework: the IMO GHG Strategy

Module objectivePlace global and regional instruments within the 2023 IMO Strategy checkpoints, distinguishing strategic ambitions, requirements in force and measures not yet adopted.

The decarbonisation of international shipping stems from the 2023 IMO Strategy on Reduction of GHG Emissions from Ships, which raised the ambition of the initial 2018 strategy. The text sets a target of reducing the carbon intensity of international shipping by at least 40% by 2030 compared with 2008, with the ambition of reaching net-zero emissions «by or around, i.e. close to» 2050. Alongside intensity, the Strategy sets checkpoints on total emissions: at least −20%, striving for −30%, by 2030, and at least −70%, striving for −80%, by 2040, both compared with 2008. And it sets a third level of ambition that is often forgotten: by 2030, zero- or near-zero-GHG technologies, fuels and energy sources should represent at least 5%, striving for 10%, of the energy used by the sector.

The overall framework of decarbonisation instruments and their relationship with the IMO GHG Strategy. Status at 29 August 2026: check the regulatory status before operational use.

The resulting instruments

The Strategy imposes nothing on a ship: it sets the ambition and the checkpoints, and leaves it to the instruments that follow from it to turn those into obligations verifiable ship by ship. This is the distinction to hold on to throughout the course — looking in the text of the Strategy for the requirement that applies to one ship means looking where it is not.

Table 1.1 — Decarbonisation instruments and their state of application.

EEXI: the one-off technical requirement

Module objectiveDetermine when EEXI applies, how it is verified and the operational consequences of EPL, ShaPoLi and hull or propeller work.

The Energy Efficiency Existing Ship Index (EEXI), introduced through an amendment to MARPOL Annex VI, extends to existing ships a design efficiency logic similar to that already required for newbuildings (EEDI). It applies to ships of 400 GT and above in the categories subject to EEDI. Unlike the CII, the EEXI is a technical requirement verified only once, not an indicator that is updated every year.

How it works

• The ship's theoretical EEXI index is calculated, based on technical design characteristics (engine power, hull type, speed).
• It is compared against a reference value (required EEXI) set for the ship's type and size.
• If the calculated value exceeds the reference, the ship must adopt measures to come within the limits: the most common are limiting installed engine power (Engine Power Limitation, EPL) or technical interventions on the hull.
• Compliance is verified at the first applicable survey — annual, intermediate or renewal — from 1 January 2023, and endorsed on the IEE Certificate; from that point it remains valid unless substantial modifications are made to the ship.

Table 2.1 — Typical EEXI compliance measures.

CII: the annual operational indicator

Module objectiveCalculate and interpret the annual CII cycle, recognising Z factors, ratings and the conditions requiring a corrective-action plan in SEEMP part III.

The Carbon Intensity Indicator (CII) measures the carbon intensity actually generated by the ship's operation over the course of the year, expressed in grams of CO2 per deadweight tonne per nautical mile travelled (or an equivalent unit for the ship type). Unlike the EEXI, the CII is recalculated every year based on actual consumption.

CII rating bands (A–E) and the required line. The reduction factors are adopted through 2030 under MEPC.400(83); the ship trajectory drawn over the bands remains an example.

The consequences of the rating

Table 3.1 — Consequences of the CII rating.

The Z reduction factors applied to the required line are set up to 2030 against the 2019 reference line: −5% in 2023, −7% in 2024, −9% in 2025, −11% in 2026, −13.625% in 2027, −16.250% in 2028, −18.875% in 2029 and −21.500% in 2030. The 2027–2030 values were adopted by MEPC 83 through resolution MEPC.400(83), amending the G3 Guidelines in MEPC.338(76). Phase 2 of the review, running to 2028, may still develop metrics, the SEEMP framework and enforcement: it does not make the adopted factors «undecided».

Levers to improve the rating

Since the CII depends on actual consumption and not only on the ship's technical characteristics, acting on the rating is largely a matter of operational management: speed, route planning, hull cleaning, cargo and trim optimisation all directly affect the current year's indicator.

The IMO Net-Zero Framework: architecture

Module objectiveExplain the architecture of the approved Net-Zero Framework text without presenting targets, prices or remedial units as obligations in force.

The Net-Zero Framework represents the IMO's attempt to introduce, for the first time at the level of an entire global sector, a mandatory limit on emissions intensity combined with a carbon pricing mechanism. The text, in the form of a new chapter of MARPOL Annex VI, was preliminarily approved during the MEPC 83 session in April 2025.

The two pillars

Table 4.1 — The two pillars of the Net-Zero Framework.

Structure of the pricing mechanism (draft)

The two compliance tiers and the remedial units of the Net-Zero Framework. Text approved at MEPC 83 but not adopted: no obligation and no price in force, figures subject to change.

The mechanism rests on two targets of different severity. The direct compliance target is the stricter one; the base target is the less demanding. A ship whose intensity falls between the two targets has a deficit only against the stricter target and covers it with Tier 1 remedial units, at an indicative price of around USD 100 per tonne of CO₂ equivalent. A ship that also exceeds the base target is in the worst case — it is further from the objective — and for the excess must resort to Tier 2 remedial units, at an indicative price of around USD 380 per tonne, on top of the Tier 1 share. Both prices are calculated on a well-to-wake basis and come from the provisionally agreed text: they could change before final adoption.

The economic logic lies in that progression: the further the ship is from the objective, the dearer every tonne becomes. A ship that stays below the direct compliance target pays nothing and earns tradable surplus units, on top of the reward foreseen for zero and near-zero emission fuels.

The Net-Zero Framework: timeline and current status

Module objectiveReconstruct the Net-Zero Framework process and translate procedural uncertainty into auditable decision scenarios.

Understanding the recent timeline of the Net-Zero Framework is essential to avoid confusing «approved in draft» with «in force»: these are two very different states with different practical implications for fleet planning.

Timeline of the Net-Zero Framework at 29 August 2026. The resumption of the extraordinary session on 4 December 2026 is subject to confirmation by MEPC 85.

The key steps

• April 2025 (MEPC 83): the text is approved, with a large majority of member States in favour. Approval is not adoption.
• October 2025 (MEPC/ES.2, extraordinary session): the formal adoption vote expected at this session is adjourned by twelve months, with 57 votes in favour of adjournment and 49 against, following strong political pressure.
• 27 April – 1 May 2026 (MEPC 84): no compromise is found between those seeking adoption with minimal change and those arguing for a market readiness approach. The committee sets no adoption date and refers the work to two intersessional working groups (ISWG-GHG), which continue on detailed guidelines: fuel life-cycle assessment methodologies, the GFI registry, and the definition of zero and near-zero emission fuels.
• 30 November – 3 December 2026 (MEPC 85), followed by the resumption of the second extraordinary session on Friday 4 December 2026: this is where the next attempt at adoption will be played out. The date is not settled, however — the IMO gives it as subject to confirmation by MEPC 85 itself — and the intersessional work preceding it is set for 1–4 September and 23–27 November 2026.
• If and when adopted, entry into force will follow tacit acceptance: amendments are deemed accepted no earlier than about ten months after communication and enter into force six months later, that is roughly sixteen months from adoption. Until there is an adopted text there is no entry-into-force date: any year quoted today is a projection, not a deadline.

EU ETS: shipping in the European carbon market

Module objectiveMap EU ETS scope, responsible entity, gases, phase-in and surrender deadline for a ship and for a shipping company.

The European Union has extended its Emissions Trading System (ETS) to maritime transport: it covers ships of 5,000 GT and above calling at ports in the Union and the European Economic Area. The share to be covered is counted on the emissions year, not the surrender year: 40% of verified 2024 emissions, 70% of 2025 emissions and 100% of 2026 emissions, each surrendered by 30 September of the following year. 2026 emissions are therefore surrendered in September 2027. From 2026 the scope is no longer CO₂ alone: it also covers methane and nitrous oxide. Offshore ships of 5,000 GT and above enter the EU ETS in 2027: a narrower scope than MRV's, and not to be confused with it.

How it works in practice

• 100% of emissions on voyages between EU/EEA ports and during port stays is covered, and 50% of emissions on voyages entering or leaving the area.
• The responsible entity is the shipping company: the registered owner, or the ISM company that has assumed operational responsibility and received a documented mandate from the registered owner for ETS and MRV. Without that mandate, the registered owner is responsible. Tasks such as data collection or allowance purchasing may be outsourced — and often are — but outsourcing a task does not transfer regulatory responsibility: before the authority, the designated company always answers.
• Allowances are surrendered by 30 September of the following year, on the basis of the verified MRV report.
• The price of allowances is determined by the European ETS market, exposing the company to that market's volatility.

FuelEU Maritime

Module objectiveApply well-to-wake limits, pooling, banking, borrowing and OPS obligations to a fleet, keeping FuelEU distinct from EU ETS.

The FuelEU Maritime regulation, applicable from 1 January 2025, imposes on ships of 5,000 GT and above calling at ports in the European Union and the European Economic Area decreasing limits on the greenhouse gas intensity of the energy used on board, calculated on a well-to-wake basis (from fuel extraction to its use).

The trajectory starts from the 2020 fleet average of 91.16 gCO₂e/MJ and tightens in steps: −2% from 2025, −6% from 2030, −14.5% from 2035, −31% from 2040, −62% from 2045 and −80% from 2050. On top of this, container and passenger ships within scope must use on-shore power supply or a zero-emission technology at berth: from 2030 in ports covered by AFIR obligations and from 2035 in other EU ports that provide OPS, subject to the exceptions in the Regulation.

Reduction trajectory of GHG intensity required by FuelEU Maritime: statutory thresholds under Article 4, not indicative values.

Flexibility mechanisms

Table 7.1 — FuelEU Maritime flexibility mechanisms.

Alternative fuels: a comparative overview

Module objectiveCompare energy carriers by pathway, well-to-wake performance, ship compatibility, availability and HSE risk.

The choice of fuel is the most significant structural decision, and the hardest to reverse, in a company's decarbonisation strategy, with impacts on newbuildings, retrofits, bunkering infrastructure and crew training.

The five energy carriers by production pathway: what decides the GHG outcome, which HSE risk dominates, and three three-level judgements for onboard maturity, bunkering and volume. Status at 29 August 2026.

Table 8.1 — Energy carriers by production pathway: what depends on the fuel and what depends on the supply chain.

Short-term operational levers

Module objectiveSelect measurable operational levers and define baselines, owners and commercial limits for each ship.

While structural investments mature, there is a wide range of low-capital operational levers that immediately affect CII, EU ETS and FuelEU, and that any superintendent can activate right away.

Decarbonisation levers: short term (operational) and long term (structural). The benefit of each depends on ship, route and baseline and must be verified by measurement; scrubbers are absent because they reduce SOx and particulate matter, not CO₂.

Short-term levers in detail

Table 9.1 — Short-term operational levers and their typical impact.

Structural investments and newbuildings

Module objectiveEvaluate retrofits and newbuildings through technical, regulatory and financial scenarios, separating GHG reduction from pollutant control.

Long-term decisions — retrofits, newbuildings, auxiliary technologies — require significant capital and long amortisation horizons, which makes them particularly sensitive to the regulatory uncertainty described in Module 5.

The main structural options

• Efficiency and propulsion retrofits: engine and propeller modifications, hydrodynamic devices, air lubrication, waste-heat recovery, batteries or wind-assist may reduce fuel consumption or replace part of the fossil energy demand, but the benefit must be measured against the ship's actual operating profile. Scrubbers are not a CO₂-reduction measure: they address SOx and particulate limits depending on configuration, may in fact increase energy consumption, and must not be counted as a decarbonisation lever.
• Dual-fuel newbuildings: maintain fuel flexibility, at a higher construction cost.
• Auxiliary wind technologies (wind-assist): rigid sails, Flettner rotors and similar systems can reduce primary fuel consumption under specific route conditions.

The investment dilemma under regulatory uncertainty

Investing today in a specific technology carries the risk that the final regulatory framework (particularly the outcome and final details of the Net-Zero Framework) will favour a different technological pathway from the one chosen. The most cautious companies favour optionality (dual-fuel, reversible retrofits) over irreversible bets on a single technology.

Building a multi-year compliance plan

Module objectiveBuild a ship-by-ship multi-year plan integrating applicable obligations, data, contracts, operational levers and investments.

The complexity and overlap of the instruments seen in previous modules make an integrated compliance plan necessary, one that does not treat EEXI, CII, EU ETS, FuelEU and the future Net-Zero Framework as separate obligations.

The components of a good plan

• Mapping of applicable obligations for each ship in the fleet, based on routes, flag and size.
• Continuous monitoring of CII and consumption, with a projection of the expected year-end rating.
• Periodic assessment of the short-term operational levers still available for each ship.
• Multi-year structural investment plan, with alternative scenarios based on regulatory developments.
• Contractual clauses with charterers that clearly allocate compliance costs: for time charters there are industry standard clauses — BIMCO's ETS Emissions Trading Scheme Allowances Clause, CII Operations Clause and Fuel Transition Clause — which are preferable to drafting one's own.
• Regular updating of the plan based on regulatory developments, particularly on the outcome of the next attempt at adopting the Net-Zero Framework, expected at the resumed extraordinary session on 4 December 2026.

Emerging trends

Module objectiveDefine a regulatory-watch process that separates adopted facts, negotiated texts and assumptions, updating scenarios.

The maritime decarbonisation framework will continue to evolve rapidly in the coming years, and some directions already appear to be taking shape.

What to watch in the coming months

• The outcome of the next attempt at adopting the Net-Zero Framework, at the resumed extraordinary session on 4 December 2026, immediately after MEPC 85, including the debate on the acceptance procedure (tacit or explicit) that will affect its entry-into-force timing.
• The development of detailed guidelines on fuel lifecycle analysis methodologies and the GFI registry, under discussion at the Intersessional Working Group during 2026.
• The evolution of the availability of zero/near-zero emission fuels at commercial scale, which will determine the real effectiveness of the reward mechanism envisaged by the Net-Zero Framework.
• The possible convergence, or conversely the growing fragmentation, between the global IMO framework and the regional European measures already in force.

Reporting and regional carbon pricing: MRV, DCS and the UK ETS

Module objectiveGovern DCS, MRV, EU ETS, FuelEU and UK ETS as separate but reconciled data chains, with verified scopes and deadlines.

Every instrument seen so far rests on one number: the consumption the ship declares. From that number follow the CII rating, the allowances to surrender and the FuelEU penalties. Anyone managing a fleet therefore has to know two reporting chains and, since July 2026, a third carbon market.

The two data chains: DCS and MRV

The IMO DCS collects, for ships of 5,000 GT and above, annual consumption by fuel type, distance travelled and hours under way; the data go to the flag or the RO, which issues the Statement of Compliance to be kept on board. The EU MRV requires, for EU/EEA voyages, per-voyage and per-ship data based on an approved monitoring plan, with the verified report uploaded to THETIS-MRV and the document of compliance carried on board. Its scope is no longer the DCS scope: since 1 January 2025 MRV also covers general cargo ships from 400 to below 5,000 GT (Art. 2(1a)) and offshore ships of 5,000 GT and above (Art. 2(1b)), and it covers CO₂, CH₄ and N₂O for emissions from 2024. The two thresholds differ and sit in two separate paragraphs: there is no single 400 GT threshold. Ship type, tonnage, activity and voyage must therefore be checked separately: MRV applicability cannot be inferred from DCS applicability.

Table 13.1 — The annual reporting calendar.

The UK ETS: the third market

From 1 July 2026 the United Kingdom has extended its ETS to shipping: it covers cargo and passenger ships of 5,000 GT and above on UK domestic routes and during stays at UK ports. The gases covered are CO₂, methane and nitrous oxide, measured on a tank-to-wake basis. The monitoring plan is per company, not per ship. The verified annual report is due by 31 March of the following year, and that already applies to 2026 and 2027. Surrender follows two different rules: ordinary from the 2028 scheme year, on 30 April of the following year; and transitional for the first two years, because 2026 and 2027 allowances are both surrendered on 30 April 2028. The first cycle, moreover, is not a full year but the half-year 1 July – 31 December 2026. Offshore units come in from January 2027.

What changes for management

With three carbon markets and two reporting regimes, consumption data stop being a technical figure and become an accounting figure: bunker delivery notes, flowmeter readings and engine-room records must reconcile with each other. A discrepancy found at verification costs more — in time, in credibility and sometimes in allowances — than a whole year of careful recording.