IMO headquaters. File Image. Image Credit: Ship & Bunker

With alternative fuels still significantly more expensive than conventional bunkers, the maritime energy transition is increasingly constrained not by technology — but by economics.

Prior to the recent escalation of tensions in the Middle East, conventional bunker fuel was trading at around US$600 per tonne. In the weeks following the disruption, prices have shown increased volatility, with benchmarks in key bunkering hubs moving higher — in some cases over US$1000 per tonne, depending on port, grade, and availability at the time of writing.

More importantly, the crisis has exposed a second layer of risk: not just the cost of fuel, but the reliability and accessibility of supply chains.

Alternative fuels such as green methanol or ammonia continue to range from US$1,200 to US$2,000 per tonne or more. For an industry consuming ~300 million tonnes annually, that gap remains one of the most significant barriers to scale.

But the challenge is no longer only about cost. In a more volatile and geopolitically exposed energy system, price, availability, and resilience are now converging as central considerations for shipowners and cargo interests alike.

The Transition as a Value Chain Problem

Shipping’s decarbonisation challenge is often framed around fuels and technology. Increasingly, it is being understood as a value chain coordination problem.

Shipowners face the immediate cost of adopting lower-carbon fuels or investing in efficiency. Yet the majority of emissions — and therefore pressure to decarbonise — sits within Scope 3, driven by cargo owners, charterers, and end users.

This creates a structural disconnect: those who can act are not always those who benefit.

In a more constrained fuel environment, this disconnect becomes more pronounced — as decisions around fuel choice, routing, and efficiency directly impact both cost exposure and physical fuel availability.

From Compliance to Market Signals

Regulation is beginning to reshape the landscape.

Measures such as FuelEU Maritime introduce compliance costs tied to emissions intensity, while the EU ETS extends carbon pricing into shipping. Over time, these frameworks are expected to narrow the cost gap between conventional and lower-carbon fuels.

However, regulation alone has historically led to late-cycle adoption.

In a more volatile energy environment, waiting for regulatory deadlines may no longer be commercially viable — particularly where fuel access, not just compliance, becomes a constraint.

This is prompting renewed interest in whether market-based mechanisms can accelerate both decarbonisation and efficiency improvements ahead of regulation.

Insetting, Efficiency, and the Monetisation of Savings

One approach is the use of insetting models, sometimes referred to as book-and-claim systems.

These models allow emissions reductions generated within a supply chain — through fuel switching, operational improvements, or efficiency gains — to be allocated across participants within that chain.

In principle, this enables:

• Cargo owners to address Scope 3 emissions
• Shipowners to recover part of the cost of lower-carbon fuels
• Supply chains to co-invest in decarbonisation

Importantly, this is not limited to alternative fuels alone.

Efficiency measures — from voyage optimisation and speed management to incremental technical upgrades — can reduce fuel consumption, lower emissions, and generate immediate cost savings.

In a higher-cost and supply-constrained fuel environment, these savings become increasingly valuable, but are often not systematically captured or shared across stakeholders.

Emerging Market Structures for Shared Value

A number of platforms and initiatives are now exploring how such models could be applied in maritime contexts.

For example, Carbon3 is one initiative focused on enabling the allocation of verified emissions reductions and associated value across shipping value chains.

Rather than focusing solely on large fuel transitions, such approaches can also capture incremental reductions in fossil fuel consumption, whether from efficiency gains or the use of renewable fuels.

The underlying concept is straightforward: if two or more parties benefit from reduced fuel consumption — whether through lower costs, reduced emissions exposure, or improved compliance — those benefits can be quantified, allocated, and shared.

In some models, these savings and emissions reductions can be represented digitally, enabling fractional allocation across stakeholders, flexible commercial arrangements, and the potential to trade or transfer value between participants.

This creates a mechanism whereby even incremental improvements can be monetised and distributed, supporting broader participation in decarbonisation efforts.

Opportunities — and Open Questions

While the concept is gaining traction, several questions remain.

Credibility and standardisation

Ensuring robust verification and avoiding double counting will be critical.

Regulatory alignment

How such mechanisms interact with FuelEU Maritime, EU ETS, or future IMO frameworks remains uncertain.

• Market acceptance
  Cargo owners and end users will need confidence that allocated emissions reductions are meaningful, auditable, and aligned with corporate reporting frameworks.
   
• Price discovery and liquidity
  Markets for fractionalised emissions reductions and efficiency gains are still developing and may take time to mature.
   
• A Complement to Regulation — Not a Substitute
  Few expect market mechanisms alone to drive the transition.

Regulation will remain essential in setting direction and minimum standards. However, markets may help accelerate adoption by enabling earlier action and distributing costs more efficiently.In a world of tighter fuel supply and greater price volatility, this role may extend beyond decarbonisation — toward optimising fuel use and improving system-wide efficiency.

Aligning Incentives in a Constrained Energy System

The maritime energy transition is no longer just about replacing fuels. It is about managing cost, carbon, and availability simultaneously.

This will likely require three forces working together:

• Regulation, to set the baseline
• Technology, to provide solutions
• Markets, to allocate value and capital

As energy systems become more constrained and complex, mechanisms that allow stakeholders to share both the costs and the benefits of reduced fossil fuel use may become increasingly important.

Whether through fuel switching, renewable inputs, or efficiency gains, the ability to capture, allocate, and trade the value of reduced consumption could play a meaningful role in accelerating both decarbonisation and resilience