Why the Net-Zero Framework Has Become a Battle Over Climate Finance, Not Just Emissions
The real fight is no longer only about decarbonizing shipping. It is about who controls the money.
In April 2025, the IMO approved a Net-Zero Framework that combines a mandatory fuel standard with a pricing mechanism, with formal adoption expected in 2025 and entry into force in 2027. That matters because the debate has moved from emissions targets to climate finance governance.
The IMO is also pointing to a dedicated Net-Zero Fund. The idea is to reward low-emission ships, support clean fuel projects, and help developing countries, rather than sending revenues into national budgets. That makes the framework very different from a simple tax.
For buyers and operators, this is not abstract policy design. A shipping carbon levy and GHG pricing mechanism will affect CAPEX, OPEX, and bunker choices for deep-sea fleets above 5,000 GT, which account for more than 85% of sector emissions.
The wider market context matters too. Global carbon pricing already mobilized more than 100 billion dollars in public revenues in 2024, according to the World Bank. Shipping is entering a world where markets expect carbon revenues to be collected, allocated, and justified with much more precision.
That is why the next question is the real one: if money is collected, who distributes it, and on what basis?
The Three Competing Models on the Table: Carbon Levy, Revenue Recycling, or No Central Fund
There are three basic models in play. The first is a pure levy, meaning a charge per ton of CO2e. The second is revenue recycling, where proceeds are redistributed toward technology, transition support, and fairness goals. The third is no central fund, with compliance and payments left to the market or to fragmented schemes.
The IMO has already pushed the negotiation toward a dedicated fund, not a general tax. That is important because it changes the policy logic from “collect and keep” to “collect and redistribute.”
For B2B planning, the difference shows up in bunker cost, compliance cost, cost of capital, and retrofit financing. A levy with recycling can improve the business case for methanol-ready, ammonia-ready, and dual-fuel newbuilds. A levy without recycling is simply a higher cost line.
The recycling model is also the one closest to just transition demands. In practice, the revenue can support infrastructure, R&D, and developing countries rather than acting only as a burden on operators.
A system with no central fund would create more fragmentation and more risk of carbon leakage in logistics. Operators could shift activity toward routes or hubs with lower costs, not necessarily lower emissions. That is why the cost impact on container, tanker, and bulk shipping matters so much.
The next issue is the economic one: what does a shipping carbon price actually do to fuel switching, fleet investment, and freight rates?
What a Shipping Carbon Price Would Mean for Fuel Switching, Fleet Investment, and Freight Costs
A carbon price would directly affect the choice between heavy fuel oil, LNG, methanol, ammonia, biofuels, and e-fuels. The market is already reacting. DNV says 515 alternative-fuelled ships were ordered in 2024, up 38% year on year.
That does not mean the transition is cheap. It means the market is pricing regulatory risk and compliance options earlier than before.
For buyers and shipowners, the key issue is fuel switching economics. DNV says bio-methanol in 2025 is around 2,500 USD per ton MGOe, roughly three times marine gas oil. Green ammonia is around 2,900 USD per ton MGOe in Europe, roughly five times the price of MGO.
Those spreads explain why a levy can accelerate orders for dual-fuel ships, but also why shipowners will keep using bridge fuels such as LNG, biofuels, and methanol-ready assets to manage near-term compliance cost.
The carbon price also changes fleet investment logic. It affects retrofit payback, energy-efficiency technologies, wind-assisted propulsion, and slow steaming. For liner operators, that quickly feeds into charter rates, asset valuation, and bunker procurement.
Freight costs need a separate reading. UNCTAD notes that container freight rates were already volatile in 2024 because of disruptions in the Red Sea, Suez, and Panama. A carbon price adds a structural cost layer on top of cyclical market shocks.
That leads to the political question: if costs are passed through to trade-dependent economies, why are developing countries pushing back, and what do they want instead?
Why Developing Countries Are Pushing Back and What They Want Instead
The pushback starts with a simple trade fact. About 80% of global merchandise trade moves by sea, and for many developing countries the share is even higher. That means higher shipping costs can hit import bills, food security, and export competitiveness very quickly.
UNCTAD estimates that decarbonizing the global fleet by 2050 could cost 8 to 28 billion dollars a year, plus another 28 to 90 billion dollars annually for carbon-neutral fuel infrastructure. That is why emerging economies are asking for transition finance, not just pricing.
Their preferred model is usually fair burden sharing. That means targeted exemptions, support for vulnerable economies, and investment in ports, bunkering infrastructure, crew training, and domestic shipping decarbonization.
UNCTAD has also warned that fragmented rules or overly broad exemptions can distort the level playing field and even leave developing countries served by more carbon-intensive shipping. So the demand is not to stop the transition. It is to make it distributively fair.
For B2B readers, the trade-off is clear. Who absorbs the cost, who receives the revenue, and how do you avoid turning decarbonization into a regressive tax on emerging supply chains?
That tension leads to the final question: what happens to carbon markets, green fuels, and trade rules if the IMO levy succeeds, or if it fails?
How the Outcome Could Shape Carbon Markets, Green Fuels, and Global Trade Rules
If the IMO Net-Zero Framework is confirmed in 2025 and implemented from 2027, shipping will become part of the global carbon market landscape. That could create new demand for compliance instruments, high-quality offsets, and possible crediting mechanisms linked to the fund.
The sector could also become a major buyer of green fuels. Methanol, ammonia, bio-LNG, and e-methane will look more bankable if carbon pricing raises the relative cost of fossil fuels and reduces policy uncertainty for investors and offtakers.
The order book already suggests that operators are preparing. DNV’s data on 515 alternative-fuelled ships ordered in 2024, with strong concentration in container and car carrier segments, points to anticipation of future fuel pricing and availability rules.
The trade policy angle matters too. The levy debate sits alongside broader discussions at WTO, IMF, OECD, UNCTAD, and the World Bank on carbon pricing and policy spillovers. A shipping-wide mechanism could become a precedent for other hard-to-abate sectors.
For buyers, traders, and fuel suppliers, the practical conclusion is simple. The success or failure of the levy will not only decide emissions. It will decide where capital flows, which e-fuels become bankable, and how quickly global trade lanes adjust to a new carbon governance model.
