UCL on ISWG-GHG 22: Majority back GHG pricing, centralised fund in IMO NZF talks

UCL Shipping and Oceans Research Group on Friday (4 September) said the IMO’s 22nd Intersessional Working Group on GHG emissions has concluded with significant majority of member states supporting a centralised system for collecting revenues, operationalised through a GHG price (RU price), and disbursing it for rewards for early adopters and supporting a just and equitable transition. 

The group of member states focused on a technical-only solution and abandonment of GHG pricing, remained small and consistently composed of strongly fossil fuel aligned governments.

Just as at MEPC 84, the political dynamics observed at MEPC.ES2 did not occur in this meeting. 

The discussions were more representative of the ISWG-GHG 19 and MEPC 83 negotiating dynamics, but this does not rule out the potential for the dynamics that occurred at MEPC.ES2 returning in future meetings. That said, there was reassuring evidence from the week that reduces that risk, including in the contrast between strong public (press) positions taken against the IMO’s NZF, and the substance of how delegations negotiated in the meeting.

Dr Tristan Smith, Professor of Energy and Transport at UCL Shipping and Oceans Research Group, said: “Whilst there are many positives to take away – there is clear potential for a return to a strong policy solution and decision making this December, there remains high uncertainty in the extent that both industry’s transition and low-income countries’ transitions will be supported. 

“There remains high risk that in the effort to find a creative way forwards, the equilibrium between these two aspects, that enabled the NZF in the first place, is lost to the detriment of the outcome overall.”

In addition to the discussion on centralised system for revenue collection and disbursement, the meeting discussed a number of other items as guided by the chair, discussed in detail with member state positions in the readout. Some of these included:

• GFI (Global Fuel Intensity) reduction pathway: GFI is likely to be softened initially (around 2030), but then steeper in the period to 2040. 
• ZNZ rewards: ZNZ reward still broadly supported and a priority to many member states, but the broad support for a multiplier, despite it being taken off the table at the last meeting, could yet lead this to be incorporated to provide incentivisation. 
• Compliance approaches: 
• Most interventions confirmed support for the compliance mechanisms as setup in NZF ‘as is’. The strongest support was for the two least controversial options common to all proposals: reducing GHG intensity and pooling/transfer of SU. 
• Direct contributions: Japan’s proposal to replace GHG pricing with shipowner-directed contributions was robustly rejected, particularly by the member states that would need to ‘swing’ to support it for this to start to build momentum. 
• SU (Surplus Units) trading: Majority of member states opposed the inclusion of energy efficiency SU credits and the concept of printing SU’s to manage an SU price shock, citing various reasons, primarily a concern that this would destabilise the SU market and undermine investment predictability. 
• Netting: China’s proposal to balance of RU and reward payments that could be netted to form a single transaction received broad support. However, the details of the concept will now need to be set out in guidelines and there remain a number of issues regarding this approach, as raised by several delegations.

Note: The full article can be read here. 

Photo credit: UCL Shipping and Oceans Research Group
Published: 7 September, 2026