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• Establishing predictable long-term ZNZs fuel demand will help de-risk investment
• Shipping's energy transition requires long-term investments in bunkering infrastructure
• Cleaner marine fuels must be economically more attractive than conventional fuels to drive the transition

EU countries and the European Commission have called for the IMO’s Net-Zero Framework (NZF) to provide incentives for the early uptake and production of zero and near-zero marine fuels.

The incentives should help balance the higher cost of using these fuels during the early stages of shipping’s energy transition, according to a joint submission to the IMO last month. 

The proposal has been submitted ahead of the 22nd session of the IMO’s Intersessional Working Group on GHG Emissions from Ships (ISWG-GHG 22), scheduled in September.

The submission is backed by 27 European countries, including major maritime nations such as Greece, Denmark, Germany, Cyprus, Malta and the Netherlands, as well as the European Commission.

The co-sponsors said transitioning shipping towards fuels, technologies and energy sources capable of delivering net-zero emissions will require substantial long-term investment in vessels, fuel production and bunkering infrastructure.

"Shipping companies operate in often very competitive markets," the document states.

"This means that transitioning from conventional high GHG fuel intensity (GFI) fuels and energy sources towards low-GFI fuels, technologies and energy sources and ZNZs will only occur if it is economically more attractive to transition than to continue to use high-GFI fuels and energy sources."

Investment Certainty for Cleaner Marine Fuels

Long-term certainty and predictability will be needed to encourage those investments and ensure cleaner marine fuels become increasingly available, they said.

The co-sponsors argued that the IMO framework should provide certainty over future demand for zero and near-zero GHG marine fuels, or ZNZs, to de-risk investment in shipping and related sectors and reduce the risk of stranded assets.

But certainty over demand alone will not be enough to encourage the early transition.

“The early transition including the initial uptake and production of ZNZs is not just governed by certainty on demand,” the submission said.

“It also requires incentives which balance the extra cost of using the more expensive ZNZs in the early phase of the transition.”

Some Ships May Still Struggle to Comply

The co-sponsors acknowledge that some ships may be unable to meet GHG intensity targets because of technical constraints or limited availability of low-GHG fuels at the ports they serve.

They therefore want flexibility built into the measure to allow a smoother and less costly transition while maintaining a level playing field between ships taking early action and those requiring more time.

"Hence, flexibility should be part of the measure to allow for a smoother and less costly transition for the full shipping sector while still ensuring a level playing field between ships taking early steps in the transition and ships needing additional time to participate," the document states.

They therefore want any proposals addressing concerns over the NZF to maintain a clear energy transition pathway and certainty over expected demand for ZNZs.

More broadly, the countries said the final IMO measures should put international shipping on a well-to-wake pathway towards net-zero GHG emissions by or around 2050.

They also called for flexible but enforceable compliance mechanisms, long-term regulatory certainty and support for a just and equitable transition, particularly for small island developing states and least developed countries.