clean report CMW IMO NZF measures_v14.docx

The report evaluates the IMO Net-Zero Framework (NZF), a hybrid measure combining a GHG Fuel Intensity (GFI) standard with a two-tier carbon pricing system. It concludes that the NZF is likely to result in modest emission reductions of 10-15% by 2030, falling short of the 1.5°C-compatible requirement of a 45% cut. The analysis highlights a weak effective carbon price of approximately USD 10–15/tCO₂eq, which is insufficient to make zero-emission fuels competitive and risks locking in fossil LNG. Revenue generation is projected to be limited (around USD 15 billion annually), significantly lower than a high flat levy scenario. The report also examines the distributional impacts, noting that SIDS and LDCs may not receive sufficient funding, and proposes integration pathways for the EU to maintain its climate ambition while participating in the global scheme.

• The IMO Net-Zero Framework (NZF) is expected to achieve only modest emission reductions of 10-15% by 2030, which is below the IMO's own indicative ambition of 20-30% and the 45% reduction required for 1.5°C alignment.
• The effective carbon price of the NZF is estimated at only USD 10–15/tCO₂eq because the nominal Tier 1 price of USD 100/tCO₂eq applies only to a small fraction (approximately 10-15%) of a ship's total emissions.
• The NZF's current price signals are insufficient to make zero- and near-zero-emission (ZNZ) fuels, such as e-ammonia and e-methanol, cost-competitive with fossil fuels, as these fuels may require break-even carbon prices between USD 200 and 550/tCO₂eq.
• The NZF risks creating a 'lock-in' effect for fossil LNG, as it provides a cheaper pathway to meet GFI targets compared to zero-carbon alternatives.
• Annual revenue generated by the NZF is projected to be around USD 10–13 billion (or USD 15.4 billion in the base case), which is significantly lower than the USD 40–60 billion that a universal carbon levy of USD 100/tCO₂eq could produce.
• The NZF's design may fail to provide adequate climate finance for Small Island Developing States (SIDS) and Least Developed Countries (LDCs), favoring major flag states and fuel-exporting nations like China and Gulf States.
• The framework is susceptible to a 'rebound effect' where efficiency gains in GHG intensity are offset by a projected 3% annual growth in maritime transport activity, potentially leading to absolute emissions rising into the 2030s.
• The EU can integrate the NZF without diluting its own ambition by maintaining EU ETS coverage for intra-EEA voyages and extending it to 100% of extra-EEA voyage emissions without allowing cost deductions for IMO payments.

APA

Cincera, M., Bakkali, S., & Douhard, J. (2025). clean report CMW IMO NZF measures_v14.docx. Carbon Market Watch. https://carbonmarketwatch.org/wp-content/uploads/2025/11/CMW-IMO-NZF-measures_v14.docx.pdf

Chicago

Cincera, Michele, Samira Bakkali, and Joran Douhard. clean report CMW IMO NZF measures_v14.docx. Carbon Market Watch, 2025. https://carbonmarketwatch.org/wp-content/uploads/2025/11/CMW-IMO-NZF-measures_v14.docx.pdf.

Wikipedia

{{cite report |last1=Cincera |first1=Michele |last2=Bakkali |first2=Samira |last3=Douhard |first3=Joran |title=clean report CMW IMO NZF measures_v14.docx |publisher=Carbon Market Watch |date=November 2025 |url=https://carbonmarketwatch.org/wp-content/uploads/2025/11/CMW-IMO-NZF-measures_v14.docx.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{cincera2025clean, author = {Cincera, Michele and Bakkali, Samira and Douhard, Joran}, title = {{clean report CMW IMO NZF measures\_v14.docx}}, institution = {Carbon Market Watch}, year = {2025}, month = nov, url = {https://carbonmarketwatch.org/wp-content/uploads/2025/11/CMW-IMO-NZF-measures_v14.docx.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }