Before EEDI was enforced in 2013, there were no efficiency criteria for newbuild vessels, meaning there are a large portion of low quality, poor efficiency vessels in the fleet that are aging to the 15YO+ age range. Credit: Veson Nautical

The Impact of New IMO GHG Regulations on the Maritime Industry

The International Maritime Organization (IMO) recently hosted the 83rd meeting with the Marine Environmental Protection Committee (MEPC 83), resulting in a new fuel intensity target set to come into force no later than March 2027. This new regulation is similar to the Fuel EU regulation enforced this year but with global fleet coverage.

The major effect of this new IMO GHG regulation will be to enforce a financial penalty for using cheaper, carbon-intensive fuels like Heavy Fuel Oil (HFO). The money collected from the scheme will be fed back into the “IMO Net-Zero Fund,” which will be used to develop and support green shipping initiatives.

The regulation aims to level the playing field for alternative fuels such as ammonia and methanol, as vessels using these fuels are at a significant economic disadvantage compared to conventionally fueled vessels unless the use of conventional fuel oils is financially penalized.

Predictions for the Shipping and Port Market

Veson Nautical reports three general predictions regarding the S&P market:

1. Increased demand for dual fuel-capable vessels
2. Older vessels built before EEDI criteria potentially considered for early scrapping
3. Increased demand for newbuild vessels and higher premiums for modern efficient vessels

As the economic viability of older vessels decreases, there is likely to be an increase in demand for newbuild vessels and young, efficient vessels in the S&P market.

Implications for the Maritime Sector

As the IMO’s new fuel intensity target approaches implementation, its effects are already shaping decision-making across the maritime sector. From accelerating the shift toward dual-fuel and high-efficiency vessels to prompting the early scrapping of older tonnage, the regulation is influencing operational and investment strategies.

While uncertainties remain around pricing and compliance mechanisms, aligning fleet composition with future emissions targets will be critical for staying competitive in a decarbonizing market.