LR on FuelEU vs IMO’s Net-Zero Framework: Double compliance, double cost?

Classification society Lloyd’s Register (LR) recently released a new issue of Horizons featuring Andy Wibroe, LR Lead Regulatory Specialist, examining the key differences between FuelEU and the IMO’s Net-Zero Framework and breaking down the potential penalties under both regimes:

Draft regulations approved by the IMO at the recent Marine Environment Protection Committee (MEPC) 83rd session raise a question for the maritime sector – will there soon be two similar and overlapping sets of regulation: the International Maritime Organisation’s Net-Zero Framework (IMONZF), and the EU’s FuelEU Maritime (FuelEU)?

The simple answer is ‘Yes’, assuming the IMONZF enters force in 2027 and controls the greenhouse gas (GHG) intensity of international shipping’s energy use from 2028 and as it currently stands FuelEU will remain in force.

From that point, any ship of 5,000 GT or more (with certain exceptions) calling at EU ports will be regulated twice, to comply with both the IMONZF and FuelEU.

However, FuelEU has a potential self-destruct mechanism, which could revert two regimes back to one. Recital 69 and Article 30 of the FuelEU regulation state that a global approach by the IMO to limit GHG ship intensity would be preferable and more effective due to its broader scope.

Accordingly, the European Commission (EC) will, if the IMONZF is adopted, conduct a review and present a report to the European Parliament and to the Council of the EU as per FuelEU Article 30. However, the specifics of this remain unclear.

Inconsistent alignment

These regulations are similar in ambition and scope but there are also differences. The IMONZF lacks some of the detail of FuelEU, including establishing the GHG default emissions factors of different fuels.

FuelEU also mandates Onshore Power Supply (OPS) but this is not required under IMONZF. FuelEU further incentivises the uptake of Renewable Fuels of Non-Biological Origin (RFNBOs), and in the future may mandate a portion of energy use from these fuels, which IMONZF does not.

The IMONZF so far only has reduction targets confirmed through to 2035 with a line in the sand for 2040, while FuelEU has a known timetable to 2050. These points of difference may align as both regulations move to an implementation phase, but we don’t yet have that certainty. There are other inconsistencies, such as the use of prearranged pools to buy and sell surplus compliance under FuelEU, which are summarised in the box below.

Risks to regulatory harmony 

For the IMONZF to be effective it must be both comprehensive and enforceable.

While there is broad support for action under the IMONZF, can intention be turned into implementation? Everything remains speculative until there is final agreement. Delays in adoption will delay global decarbonisation measures.

If, once published, the guidance and methodologies underpinning the IMONZF diverge too much from FuelEU then this could present a problem to removing FuelEU.

Similarly, if FuelEU and the IMONZF do have to coexist, there may be some way to report both but only pay once and so avoid double payments, if not double monitoring.

Note: The full article by LR can be found here. 

Photo credit: Venti Views on Unsplash
Published: 7 July, 2025