Double Compliance Looms as IMO and EU Climate Rules Set to Collide: LR

Lloyd’s Register warns that ship operators may face dual climate rules from 2028, unless the EU alters FuelEU to accommodate the IMO’s planned Net-Zero Framework. Image Credit: IMO

Classification society Lloyd's Register (LR) says shipping firms may soon face overlapping climate regulations as the IMO's Net-Zero Framework (IMONZF) moves toward adoption, potentially clashing with the EU's already active FuelEU Maritime rules.

If the IMONZF is formally adopted in October and enters into force in 2027, ships of 5,000 GT or more calling at EU ports could be regulated twice -by both FuelEU and the IMO - starting in 2028, LR said in a new article published on Tuesday.

While both frameworks aim to cut well-to-wake GHG intensity, they differ in detail, such as fuel emission factors, enforcement mechanisms and compliance incentives.

FuelEU, already binding from 2025, includes mandates for onshore power supply and offers pooling and borrowing flexibility. The IMO framework, while global in scope, features a two-tier compliance system and financial penalty rates.

"However, FuelEU has a potential self-destruct mechanism, which could revert the two regimes back to one, LR argues.

"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."

The European Commission may review FuelEU and could propose changes if the global IMO regime is shown to deliver equivalent or better climate outcomes.

"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," it said.

Analysis by LR suggests that IMONZF may be more stringent overall, abating more CO2-equivalent and generating higher cumulative penalties through 2045.

"This analysis shows the IMONZF setting greater annual financial penalties up to 2045, with FuelEU then taking over and setting greater penalties from 2045 to 2050," LR explained.

Still, the outcome hinges on the IMO's implementation path - and whether the global regime can prove it's both workable and impactful enough to replace regional efforts.