The International Maritime Organization (IMO) has concluded the 83rd session of its Marine Environment Protection Committee (MEPC 83), marking a major milestone in global maritime decarbonization efforts. The session’s centerpiece was the formal approval of the IMO Net-Zero Framework—an ambitious policy move that passed despite resistance from several member states, including the United States and key oil-producing nations.
According to an analysis by Rystad Energy, the IMO’s decarbonization measures introduce more stringent compliance targets than those of the European Union’s FuelEU Maritime initiative. Under the IMO’s new pricing model, very-low sulfur fuel oil (VLSFO) will face less severe penalties compared to the EU regime, with costs projected to remain below $1,000 per tonne until 2035. After that, costs are expected to surpass $1,100 per tonne.
In contrast, liquefied natural gas (LNG) is treated more favorably under FuelEU Maritime but encounters steeper penalties under IMO regulations. Despite LNG being subject to the EU Emissions Trading System (ETS) tax—resulting in a higher total carbon tax in the EU than under the IMO framework—LNG is expected to retain its position as the most economical marine fuel option across both systems until 2035.
Rystad’s economic modeling of VLSFO under IMO rules breaks down fuel costs into base pricing and regulatory unit (RU) penalties. The Tier 1 RU penalty, currently about $49 per tonne, is forecast to remain stable over the next decade due to consistent gaps between compliance and base targets. The Tier 2 RU penalty, nearly double that of Tier 1, is expected to rise from $90 per tonne before 2030 to $150 between 2030 and 2034, before jumping dramatically to $463 in 2035—equivalent to over 70% of the base fuel price.
The study also evaluates LNG’s cost dynamics, particularly when used in LNG diesel slow-speed engines. Comparing IMO and EU regulatory impacts, Rystad’s findings show LNG remains a cost-competitive option across both frameworks. Notably, VLSFO proves more economical under IMO guidelines than under EU rules, primarily due to the EU’s harsher penalty structure.
While LNG continues to meet FuelEU Maritime targets through 2039, even when subjected only to the EU ETS tax, its overall cost under EU rules remains lower than under IMO pricing.
Meanwhile, e-ammonia—a potential zero-carbon alternative—remains economically uncompetitive compared to fossil fuels. Even with regulatory incentives and compliance flexibility such as surplus unit pooling and the forthcoming Zero and Near-Zero (ZNZ) rewards policy, the cost gap persists. The analysis stresses that LNG’s price advantage is likely to continue until e-fuels reach cost parity, highlighting the urgent need for robust financial mechanisms to support the adoption of ZNZ fuels and technologies.
The outcome of MEPC 83 reinforces the IMO’s commitment to a carbon-neutral shipping industry, signaling regulatory momentum that may reshape global fuel economics for years to come.
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