The IMO’s proposed Net-Zero Framework (NZF) could have implications for U.S. maritime trade if its fuel requirements and associated costs
The IMO’s proposed Net-Zero Framework (NZF) could have implications for U.S. maritime trade if its fuel requirements and associated costs result in higher transportation costs or reduced service availability, according to Sean T. Pribyl, Allison N. Skopec and Lucille L. Marvin of Holland & Knight.
In their analysis, the authors highlight potential questions under the U.S. Shipping Act if fuel mandates or other NZF requirements lead to unreasonable increases in transportation costs or decreases in service. The Shipping Act, as amended by OSRA 2022, prohibits common carriers from engaging in unjust or unreasonable practices affecting U.S. commerce.
If environmental compliance costs are passed on to U.S. importers and exporters through surcharges, tariffs or service changes, affected parties could potentially seek FMC scrutiny.
The Federal Maritime Commission’s Section 19 authority could also become relevant. According to the authors, the FMC may investigate foreign laws, regulations or practices that create, or could create, conditions unfavorable to shipping in U.S. foreign trade, including discriminatory requirements, increased operating or cargo costs and other burdens on maritime activity.
Although a Commission finding would be required before relief is imposed, potential remedies can include equalizing fees, restrictions on sailings or cargo, suspension of tariffs or service contracts, fees of up to $1 million per voyage and, in appropriate circumstances, a request to deny vessels entry to U.S. ports.
FMC Chairman Louis E. Sola has previously raised concerns about the proposed IMO fund and its potential economic effects, while questioning whether a global IMO regime should replace regional carbon-pricing systems such as the EU ETS. The authors stress that these comments do not represent a formal position of the FMC or the wider U.S. administration, but argue that they illustrate the growing policy debate in Washington over the framework’s economic implications.
The analysis also points to uncertainty surrounding the availability and scalability of alternative fuels. Proposals that require their adoption before commercial viability is demonstrated could create concerns over affordability and supply, while delays to the NZF could contribute to further regulatory fragmentation as regional carbon-pricing regimes expand.
Recommendations for industry stakeholders
Shippers, carriers and other maritime industry participants should closely monitor developments at the IMO as the NZF advances. Key considerations include:
- assessing potential exposure to increased transportation costs resulting from fuel mandates and developing strategies for cost management and allocation in service contracts
- monitoring the evolving U.S. regulatory posture and any retaliatory trade measures the U.S. may pursue against flag states supporting the framework
- engaging with policymakers and industry associations to advocate for NZF provisions that recognize commercially viable alternative fuels
- preparing for regulatory fragmentation, as the continued delay in NZF adoption may result in an expanding patchwork of regional carbon pricing systems imposing varying compliance obligations depending on trading routes
- evaluating service contracts and tariff provisions in light of potential environmental surcharges and compliance cost pass-throughs
- leveraging the FMC’s protective oversight to address carrier practices that may raise concerns under the Shipping Act
The authors conclude that upcoming IMO negotiations, including discussions on fuel alternatives and the resumed extraordinary session penciled in for December 4, 2026, will help determine the framework’s direction. They argue that if an adopted NZF produces conditions considered unfavorable to U.S. foreign commerce, the issue could move beyond international climate policy and become a matter for FMC regulatory scrutiny.
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