Panama Joins EU Push for Early Agreement on IMO Net-Zero Fund

Panama joins 31 European countries and the European Commission in pressing for fund rules to be agreed by 2026. Image Credit: IMO

Panama has joined several European countries and the European Commission in calling for the early adoption of governing provisions for the IMO Net-Zero Fund, ahead of the fund's planned revenue intake in 2029.

The countries have urged the member states to finalise the fund rules by the MEPC 85th session in 2026, they said in a submission to the IMO this month.

This would allow sufficient time to establish the governance structure and appoint a governing board.

"The co-sponsors find that it would be prudent to aim for the governing provisions to be adopted by MEPC 85 in the second half of 2026, as this would allow some time for the IMO Net-Zero Fund to be established and for the Governing Board to set up the functions to be operative before the regulation takes effect," the document states.

The net-zero fund is a central element of the IMO's Net-Zero Framework, which combines a fuel standard with a global emissions pricing mechanism.

The fund is designed to collect GHG pricing contributions from ships and redistribute them as rewards for ZNZ fuels and technologies, while also supporting research and infrastructure development in developing states.

The IMO Net-Zero Framework was agreed in principle by member states in April and is set for adoption at an extraordinary MEPC session next month.

Members Stress Transparency and Accountability

A governing board, appointed by the MEPC, will oversee daily operations, including approving disbursements and reporting annually to the Committee.

The paper notes that lessons from other international mechanisms, such as the Green Climate Fund, should guide practices on auditing, risk management, and representation.

Board membership is expected to be geographically and gender balanced, with guaranteed seats for small island developing states (SIDS) and least developed countries (LDCs).

"To uphold the legitimacy of the IMO Net-Zero Fund and its Governing Board, it is crucial that the governance structure ensures transparency and safeguards against any form of corruption, the document notes.

"The rules governing the composition of the Governing Board will also need to address
aspects related to term limits and rotation of members."

Among the 31 IMO member states supporting the proposal are Panama, Greece, Cyprus and Denmark, joined by the European Commission.

"The co-sponsors remain committed to continued collaboration with all delegations in
advancing this work, and stand ready to engage constructively on how best to structure the
IMO Net-Zero Fund and take the process forward."