Opinion: Decarbonizing Shipping in a Fragmented World – Reflections for Brazil from LISW & the IMO Vote Ahead

Andrew Lorimer

Chief Executive Officer, Datamar

London International Shipping Week (LISW), one of the world’s most prominent maritime events, closed last week and it delivered a firm resolution from the industry to commit to voting through the recently proposed rules for the Net-Zero Framework next month.

LISW provided me with a new perspective on the topic of decarbonization. While we don’t all hear much about decarbonization in traditional maritime data business circles in Brazil, it is clear that the push for decarbonization remains a real and urgent matter in London, arguably one of the world’s leading shipping and maritime centers of the world. Read on to understand why and how.

The event brought together Government officials and regulators (e.g. IMO, UK government, EU representatives), shipowners, charterers, ports, terminals, financiers, insurers, and lawyers, as well as technology, fuel, and logistics providers.

During LISW, there were:

• High-level conferences and debates on shipping, trade, environment, and regulation.
• Exhibitions and showcases of maritime technology and services.
• Private networking events across London (including receptions at embassies, City institutions, and onboard ships).

One of the sessions within the headline conference held at the IMO (International Maritime Organization), was titled “Decarbonizing a global industry in the contemporary geopolitical environment” and provided an insight into whether the industry intends to hold firm against critics next month when a major vote on the Net-Zero Framework (NZF) will take place.

As I listened in London, I wondered how Brazil’s preparation for what lies ahead is currently developing. Both at government as well as industry level. At government level, whether a carefully pondered analysis of the implications for trade and foreign investment is being conducted, with a weighing up of the expected reactions by the polar powers of China and the USA. At industry level, whether all players that will be affected have been following developments and are positioning themselves wisely amid the coming turbulence.

What Is the Net-Zero Framework, and What’s at Stake in October

So, what is the Net-Zero Framework – well, it is a regulatory package under development at the IMO designed to steer the global shipping sector toward net-zero greenhouse gas (GHG) emissions by 2050.

In April this year, the Marine Environment Protection Committee (MEPC) drafted new rules to be considered and voted on later in the year. The main points include:

• Mandatory targets for reducing fuel greenhouse-gas (GHG) intensity for ships over 5,000 gross tonnage.
• A mechanism of economic incentives and penalties: ships failing to meet intensity targets incur remedial units or penalties, while those doing better than required can bank or trade units. Revenue generated will feed a Net-Zero Fund to support zero / near-zero fuels and help developing nations adapt.
• Technology‐ and fuel‐neutral rules, meaning the framework does not favor or ban any specific fuel (biofuels, LNG, etc.), so long as emissions per energy unit are reduced.

The formal vote is expected at an IMO extraordinary session in mid-October 2025 – just two or three weeks away. To pass, the measure requires a two-thirds majority of IMO member states in MARPOL Annex VI, representing 50% of global flag state tonnage.

What Was the Mood in London?

In London, there was a strong sense that the vote will pass. Delegates, including many analysts, shipowners and port executives, expressed visible support at the conference. Most members see the framework as inevitable, given the pressure from customers, financiers, climate-policy groups, and national governments.

But concerns remain:

• Compliance costs, especially for shipping firms operating on thin margins.
• Fuel availability and infrastructure, with zero- and near-zero fuels not yet scalable in many regions.
• Fairness in cost distribution, particularly for developing nations and export-driven economies.

It is clear that there is a fear of ‘first-mover disadvantage’, implying that those nations that move first will bear the cost but risk not reaping the benefits. Zero- or near-zero GHG fuels (green methanol, ammonia, hydrogen, nuclear) are much more expensive than conventional bunker fuel. Shipowners in first-mover countries will face higher operating and capital costs than competitors still burning cheap heavy fuel oil. If global rules lag behind, these early movers may lose market share on international routes.

This applies to infrastructure costs as well as those ships not adhering to regulations may reroute to cheaper non-compliant ports. Another example would be the required early investment in current technologies (e.g. ammonia engines) which may become stranded if the IMO later favors another pathway (e.g. nuclear, hydrogen, synthetic fuels). Ship lifetimes are 20–25 years. An early investment might lock a fleet into a tech that becomes obsolete.

Likely Outcomes: Will the US Vote Against? Will It Retaliate?

So how will things pan out in a few weeks’ time? Well, one important factor is the position of the United States. They have already signaled that it will vote against the framework. American officials argue that it will raise costs for U.S. consumers and shippers, and they have even threatened retaliation against countries supporting it — potentially via tariffs or regulatory counter-measures. Whether such threats materialize is less clear, but the warnings underline the geopolitical tensions surrounding the vote.

If the framework passes, compliance obligations will kick in from 2027–2028, with the Net-Zero Fund beginning to channel revenues into fuel development and support for developing nations. If it fails, regulatory fragmentation is likely: more unilateral schemes are bound to proliferate, generating greater uncertainty for shipowners, and weaker momentum toward decarbonization.

Brazil’s Likely Vote

Brazil’s track record at the IMO and in climate negotiations makes its stance fairly predictable. Brazil has traditionally supported multilateral agreements, recognizing that a fragmented system of regional rules would hurt its exporters by raising costs and complicating logistics.

At the same time, Brazil often positions itself as a bridge between developed and developing countries, acknowledging the urgency of climate action but demanding fairness and transitional support. In IMO negotiations over the last two years, Brazil has emphasized the importance of funding mechanisms and recognition of biofuels — both of which are reflected in the Net-Zero Framework draft.

With COP30 set to take place in Belém, Brazil has an additional incentive to support the IMO plan. Voting against would undermine its credibility as host. For this reason, Brazil is widely expected to vote in favor of the Net-Zero Framework, while continuing to lobby for:

• Recognition of biofuels as a valid transitional pathway.
• Flexibility in timelines to protect exporters.
• Fair distribution of costs through the Net-Zero Fund.

Sanctions, Shadow Fleets, and the Contradictions of Decarbonization

One issue that was not discussed in the headline conference but was widely tackled during the week in London, and hung in the background, is the reality of the shadow tanker fleet. It was argued by some that sanctions on Russian oil and other restricted trades have created a parallel fleet of energy vessels that is now estimated at around 1,300 vessels — roughly 20% of the global tanker fleet.

This is not just a collection of ships operating outside the mainstream. Over the past two years, it has developed an entire support infrastructure: bunkering services, port access, and logistics networks that allow these ships to keep trading despite restrictions.

This growth in infrastructure has been enabled by the involvement of the world’s largest trading nation. Only China has the commercial clout to indirectly, or directly, support the increased activity observed. And its involvement has emboldened the involvement of other nations in these trades. And that might include Brazil.

The irony is stark. China routinely votes in favor of green measures at the IMO and in climate forums, positioning itself as a champion of net-zero ambition. Yet, because of its trading ties with Russia, Iran, North Korea, and other sanctioned states, it has become a major participant in — and beneficiary of — the shadow fleet. In practice, the same nation that supports climate ambition is also enabling one of the most opaque, least regulated, and carbon-intensive segments of global shipping.

For Brazil, this contradiction is not just a distant problem. China is Brazil’s largest trading partner, absorbing massive volumes of soybeans, iron ore, pulp, meat, and other exports. If China continues to straddle both the regulated decarbonization framework and the unregulated shadow fleet, Brazilian exporters risk being caught in the middle:

• Compliant shipowners serving Brazil will face rising compliance costs under the IMO’s Net-Zero Framework.
• A significant share of tonnage will continue to operate outside the rules, distorting freight markets and undercutting compliant carriers.
• Exporters could face price volatility, uneven access to shipping capacity, and reputational risks if cargoes are carried — directly or indirectly — on shadow vessels.

The growth of the shadow fleet highlights the central challenge facing the industry: ambitious frameworks alone cannot guarantee compliance. Unless enforcement mechanisms extend beyond traditional shipping lanes, the playing field will remain tilted — and exporters like Brazil may end up paying the cost of other nations’ contradictions.

Brazil’s Export Profile: Why This Matters More to Us

Brazil’s position as a commodities powerhouse makes it uniquely exposed to the costs and consequences of decarbonization. Few nations depend so heavily on bulk shipping to move their economy:

• Soybeans and corn: Brazil is the world’s largest soybean exporter and a major supplier of corn, both reliant on bulk carriers.
• Iron ore: Vale’s exports to Asia, particularly China, dominate global dry bulk flows.
• Petroleum and derivatives: Petrobras continues to expand its exports, particularly to China and the US Gulf.
• Protein exports: Beef, chicken, and pork make Brazil the leading global supplier of animal protein, commodities increasingly scrutinized for their environmental footprint.
• Forest products: Pulp and paper as well as wood exports, are among the most environmentally sensitive commodities in global trade.

As the IMO’s Net-Zero Framework raises costs for compliant shipping, these sectors — staples of Brazil’s trade profile — will feel the impact most directly. Rising freight rates or restricted access to compliant tonnage could affect Brazil’s competitiveness in world markets.

Brazilian Shipowners: Who’s at Stake

While Brazil is primarily a shipper/exporter rather than a global shipowning hub, several companies will be directly affected by new compliance rules. Among the most significant:

Transpetro (Petrobras subsidiary) – Tankers – Largest Brazilian shipowner; fleet engaged in oil exports and cabotage;

Log-In Logística Intermodal – Container – Regional container line serving cabotage and Mercosur trades; compliance costs will feed directly into domestic logistics chains.

Hidrovias do Brasil – Barges / Bulk – Major inland operator (grain, ore, fertilizers); faces pressure if bulk freight rates rise or biofuels gain traction.

Aliança Navegação (Maersk) – Container – Foreign-owned but key in Brazil’s cabotage; dependent on IMO rules.

Vale – Dry Bulk – Operates one of the world’s largest iron ore shipping programs; heavy reliance on Very Large Ore Carriers (VLOCs).

Smaller cabotage operators (Norsul, Wilson Sons, etc.) – Mixed – Serve coastal and feeder trades; margins more sensitive to compliance costs.

Though smaller than the Greek, Chinese, or Japanese fleets, these companies — alongside the foreign carriers serving Brazil — will bear the compliance burden. Their costs will flow through to exporters and, ultimately, to Brazil’s trade balance.

Timeline: Global Decarbonisation Milestones

2015 – Paris Agreement adopted (COP21) – Global commitment to limit warming below 2°C.

2016 – Paris Agreement enters into force – Countries begin submitting NDCs (Nationally Determined Contributions).

2023 – IMO adopts updated GHG strategy – Net-zero emissions “by or around 2050”; interim checkpoints set.

April 2025 – IMO MEPC 83 agrees draft Net-Zero Framework – Includes mandatory GHG intensity targets, incentive/penalty scheme, and Net-Zero Fund.

October 2025 – IMO extraordinary MEPC vote on Net-Zero Framework – Requires 2/3 majority of states + 50% of global tonnage.

2027–2028 – Framework enters into force (if adopted) – Large ocean-going vessels must comply with fuel intensity reductions; penalties and fund contributions begin.

2030 – First milestone: 5% GHG reduction – Seen as a critical litmus test for IMO credibility.

2050 – Net-zero target date – Long-term horizon for full decarbonization.

Final Reflections

Despite the current geo-political environment and the indirect effect this has on rising emissions of GHGs, the IMO is determined to push through its decarbonization agenda. The war in the Middle East has led to increased violence against commercial shipping, which in turn has led to longer voyages around the cape of Good Hope and an increase in GHGs over the last few years. This provides fodder to nay-sayers to argue that the world should be busier looking for ways to secure the high seas rather than to concern itself with decarbonization.

In parallel, the current US administration vehemently opposes what it sees as unnecessary IMO-led rules for shipping that will increase costs and endanger its shipping economy. But its vote only counts as one vote out of the near-200 IMO member states. Further, it holds no veto power. But its threat to punish those countries that do adhere certainly does loom over the vote.

To some degree, this scenario would seem to favor a pause or delay to proceedings. But the mood in London was that too much has already been invested, and we are too far along the agenda, for this to be a viable consideration. A 5% cut by 2030 was agreed and that is not negotiable. The alternative to agreement is fragmentation, and that is dangerous. Without IMO leadership, the risk of divergent regulations is high, and the cost to shipping — and to countries like Brazil — will be severe.

Lastly, the shadow fleet is a reminder of reality. While compliant shipowners prepare for costly transitions, a fifth of the tanker fleet operates outside the rules, supported by infrastructure and major trading nations, some of which are paradoxically vocal supporters of green measures at the IMO.

For Brazil, these contradictions matter. Our exporters will have to adapt to rising compliance costs while competing in a market distorted by unregulated vessels. The fact that China — our largest trading partner — participates in both the regulated decarbonization framework and the shadow fleet underscores the complexity of the environment we face.

Brazil’s task is not to lead the global debate, but to ensure we are not left behind. That means engaging with the IMO framework, pressing for recognition of transitional fuels like biofuels, and ensuring fair cost distribution through mechanisms like the Net-Zero Fund. It also means protecting our exporters from distortions created by parallel markets that undermine legitimate compliance.

At Datamar, we will continue to track how these global regulatory shifts intersect with South American trade flows. Decarbonization is no longer an abstract issue — it is reshaping shipping lanes, costs, and market dynamics in real time. And as COP30 approaches, Brazil will find itself not on the sidelines, but squarely in the middle of the conversation.

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