Hey,

Right now, somewhere, a shipowner is signing off on a methanol-ready newbuild. Somewhere else, a bunker supplier is scaling up green ammonia production. Both are betting on a rule that doesn't fully exist yet, and might not exist at all by early December.

On September 22, addressing the UN General Assembly, Trump took credit for having already blocked what he called "an obscure UN body," the IMO, from secretly establishing the world's first global carbon tax, one he said could raise international shipping costs by 10 to 20%. "There will be no global taxes," he told the assembly. He wasn't exaggerating the stakes, even if the framing was his own. What's actually on the table is the first-ever global carbon pricing mechanism for any transport sector, anywhere. And the vote he was talking about isn't settled. It's scheduled to resume on December 4, right after the IMO's main annual session wraps up.

The IMO's Net-Zero Framework works like this: starting in 2028, every ship above 5,000 gross tonnage, the vessels responsible for 85% of the industry's emissions, has to keep lowering the emissions intensity of the fuel it burns. Miss the target, and the ship has to buy remedial units, essentially paying for the excess, at rates the IMO itself set as high as $380 per tonne of CO2 equivalent. That money, an estimated $11 to $13 billion a year by the IMO's own projection, would fund the industry's shift to cleaner fuels.

It's not new. The draft passed in April 2025, 63 votes to 16. The US pushed back hard enough, threatening tariffs, visa restrictions, port fees and sanctions against countries backing it, that the vote to formally adopt it got postponed by a razor-thin margin: 57 to 49. Trump's UN speech was the same fight, one more round, louder.

Here's what the headline misses. While all of this has been unresolved, plenty of the industry didn't wait around to see how the vote would go. Owners have been ordering methanol dual-fuel vessels. Ports have been building out ammonia bunkering. Fuel producers have been sinking capital into green production capacity years before any ship needs to burn a drop of it.

That's not naive and we speak about it a lot in this newsletter. Betting early on where regulation is heading, instead of waiting for certainty that never really comes in this industry, has usually been the smarter play. But it only works if the regulation actually lands somewhere close to where you bet. Right now, nobody knows if it will.

Strip out the politics and look at who benefits from each outcome. If the framework survives, whoever already has clean fuel supply locked in gets to sell it into demand everyone else now has to scramble for. If it collapses or gets watered down, the owners and oil-producing nations that held off spending on compliance keep their capital free, and the early movers are left holding more expensive ships than the market currently requires them to have.

Neither side is rooting for the "right" policy outcome here. They're rooting for the outcome that matches the bet they already made.

The IMO's main annual environmental session, MEPC 85, runs November 30 to December 3. The reconvened vote on the Net-Zero Framework is scheduled for the day right after, December 4, subject to confirmation at that same session. It doesn't actually end the uncertainty either way. Adopt the framework under this much political pressure, and there's a real question of how firmly the US and its allies comply, or whether this becomes a rule half the world treats as optional. Kill it again, and the industry is back to planning fleet investment on a 15 to 20 year horizon with no idea what the rules will look like in year three.

Waiting for certainty in this industry is its own decision, and usually the more expensive one. The owners who ordered dual-fuel ships years ago weren't reckless, they read the direction of travel and moved before the rules were final, knowing the rules might still change under them.

That's the actual skill here, and it has nothing to do with which way the vote goes. It's being able to commit to a direction while the ground is still moving, and building something that survives being wrong about the details, even if you turn out to be right about the direction.

What outcome do you expect on this decision? Hit reply and tell me where you'd put your money.

Talk soon.

Fer

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