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Japan Proposes Softer IMO GFI Targets at MEPC 85
Japan has proposed easing future greenhouse gas fuel intensity targets under the IMO Net-Zero Framework and replacing the planned IMO Net-Zero Fund with a system that would allow ships to make direct contributions to eligible decarbonisation projects.
The proposal, submitted to the International Maritime Organization’s Marine Environment Protection Committee (MEPC 85), would leave the existing 2028 and 2029 targets unchanged but soften the reduction trajectory from 2030 onwards.
Japan has stressed that the revised amendments do not represent its preferred position. Instead, the proposal is intended to provide a basis for discussions aimed at reaching an agreement acceptable to IMO member states.
Japan Seeks Softer GFI Targets From 2030
The IMO Net-Zero Framework was approved at MEPC 83 and introduced a two-tier greenhouse gas fuel intensity (GFI) standard.
Under the framework, ships would progressively reduce their well-to-wake GHG emissions from 2028, using a 2008 baseline of 93.30 gCO2e/MJ.
The framework includes both a base target and a more demanding direct compliance target. The reduction requirements range from 4% to 17% in 2028 and tighten progressively to 30% to 43% by 2035.
Japan is now proposing a less aggressive reduction pathway beginning in 2030.
Under its proposal, the direct compliance target for 2030 would be adjusted from 73.71 gCO2e/MJ to 74.6 gCO2e/MJ.
The difference becomes considerably larger by 2035. Japan proposes a direct compliance target of 60.7 gCO2e/MJ, compared with 53.18 gCO2e/MJ under the currently approved framework.
Alternative Target Would Remain Flat Through 2035
Japan has also presented an alternative approach.
Under this option, the direct compliance target would remain at 72.9 gCO2e/MJ from 2028 through 2035, equivalent to a 21.9% reduction from the baseline.
This alternative would impose stricter requirements than the current framework through 2030 but would become less demanding from 2031 onwards.
Japan has also proposed removing the existing 65% base reduction target for 2040.
Instead, reduction factors covering 2036 to 2040 would be determined by the Committee by 1 January 2032.
The decision would take into account the global availability, affordability and scalability of new marine fuels and technologies.
Direct Contributions Could Replace IMO Net-Zero Fund
One of the most significant elements of Japan’s MEPC 85 proposal concerns the financial mechanism supporting compliance.
Under the approved Net-Zero Framework, ships that fail to meet the direct compliance target would pay $100 per tonne of CO2-equivalent for Tier 1 remedial units.
Ships that also fail to meet the base target would face a substantially higher Tier 2 price of $380/mtCO2e.
Meanwhile, ships performing better than required could generate surplus units that can be traded or banked for future compliance.
Japan proposes an alternative system for ships that fail to achieve the required GFI targets.
Instead of paying into the IMO Net-Zero Fund, these vessels could purchase surplus units from over-complying ships or make direct contributions to eligible projects selected by the ship.
The proposed direct contributions would use the same minimum pricing structure: $100/mtCO2e for Tier 1 emissions and $380/mtCO2e for Tier 2 emissions.
IMO Would Determine Eligible Decarbonisation Projects
Japan’s proposed mechanism largely follows the types of eligible projects already included in the Net-Zero Framework’s revenue distribution provisions.
However, instead of providing rewards for zero and near-zero emission fuels, funding would support projects promoting the uptake of new fuels and technologies.
The proposal also establishes a governance structure for these contributions.
Flag administrations would nominate projects for consideration, while the IMO would determine whether those projects qualify. The administration proposing a project would then audit the entity responsible for its implementation and report the results.
Japan’s proposal also removes Regulation 39 of the approved framework. That regulation establishes thresholds for zero and near-zero GHG emission technologies and fuels and provides financial rewards through the IMO Net-Zero Fund for ships using them.
Timing Could Affect Adoption of the Net-Zero Framework
The proposal builds on an earlier submission made by Japan at MEPC 84, but its timing could create procedural complications.
Under normal IMO procedures, proposed amendments to MARPOL are generally required to be circulated at least six months before adoption.
A proposal submitted after June would therefore not normally be eligible for adoption at the resumed second extraordinary session, MEPC/ES.2, scheduled for 4 December.
However, IMO member states could choose to waive the requirement and proceed with adoption of the Net-Zero Framework at that session.
Another possibility would be to delay adoption until a later meeting, potentially in 2027.
The outcome will depend on whether member states can reach sufficient agreement over the GFI trajectory, compliance mechanism and financing structure of the IMO’s proposed shipping decarbonisation framework.
