The shipping industry is facing significant uncertainty as it navigates the transition to a low-carbon future. A new insight brief by the UCL Shipping and Oceans Research Group has shed light on the potential consequences of different scenarios for the Net Zero Framework, which was agreed in principle in April 2025. The report concludes that only one option - adopting the framework 'as is' - has the potential to provide a credible and stable demand signal and revenue stream to support early and mass-market uptake of scalable zero-emission fuels. This is crucial for the industry's transition to a low-carbon future, as it will enable companies to make long-term investment decisions with confidence.
The weaker alternatives to the 'as is' scenario risk delaying the availability of scalable zero-emission fuels into the 2040s, while also reducing just and equitable transition opportunities. This could have significant consequences for lower-income countries, which would be disproportionately affected by a slower transition. The report highlights the importance of adopting a framework that provides a stable demand signal and revenue stream to support early and mass-market uptake of scalable zero-emission fuels.
The Net Zero Framework is considered a fragile compromise, and analysis suggests that adjustments to make it acceptable to some governments could lead to further deadlock at the IMO. Pursuing compromise on the framework 'as is' therefore risks further delays in the transition process and increased likelihood of a patchwork of regional regulation. This could lead to a disorderly, expensive, and inequitable transition for the industry.
The insight brief considers three potential scenarios for the Net Zero Framework: adopting it 'as is', removing economic elements to create a single-tier global fuel standard, or stripping away its compliance market and non-compliance costs. Each scenario has materially different impacts on enforcement, investment signals, revenues, low-income countries, and regional policies.
The report concludes that alternative scenarios to the 'as is' option would provide little or no demand signal and revenue to support uptake of scalable zero-emission fuels needed in the long run. This would severely limit the industry's ability to make long-term investment decisions with confidence. The weaker alternatives would also raise costs for lower-income countries, but would do so in a way that would severely limit their capacity to support their transitions.
The report highlights the importance of adopting guidelines for implementation to manage some of the risk factors associated with the Net Zero Framework. Even the 'as is' scenario is projected to deliver only around 10% absolute GHG reduction by 2030 against 2008 levels - below the Revised Strategy's 20-30% checkpoint in 2030.
The NZF 'as is' had the support of 88% of MARPOL signatories at the point of agreement, but reopening the framework text would likely produce little evidence of broader consensus. This could reignite political deadlock and further delay the transition process.
Deferment of long-term investment decisions from a protracted delay in search of a majority that is unlikely to exist increases the risk of a disorderly, expensive, and inequitable transition. The report therefore finds that progressing to adopt the Net-Zero Framework 'as is' at MEPC.ES2 in November 2026 has the lowest transition risk, both for countries and for many companies.
The industry must navigate this uncertainty carefully to ensure a smooth and equitable transition to a low-carbon future. Adopting a stable demand signal and revenue stream is crucial for making long-term investment decisions with confidence.
The report highlights the importance of adopting a stable demand signal and revenue stream to support early and mass-market uptake of scalable zero-emission fuels.
