World News
WSC Pushes for Market-Based Method to Set IMO's Net-Zero Fuel Rewards
The World Shipping Council (WSC) has urged the IMO to ensure its planned reward system for zero- and near-zero (ZNZ) fuels is rooted in market data, saying that transparent incentives are vital to accelerate shipping's transition.
In a submission to the IMO, the WSC proposed that rewards be calculated using a marginal abatement cost (MAC) methodology.
This would link the payout directly to the price and emissions gap between conventional marine fuels and ZNZ alternatives.
"The purpose of the reward is to enable ships to use ZNZ fuels to compete in the market and to meet the ZNZ thresholds provided in the IMO Net-Zero Framework, the document states.
"As such, the reward should substantially narrow or come close to bridging the price gap to enable commercial operation with ZNZ fuels."
WSC notes that unless the price gap is narrowed, shipowners may continue burning conventional marine fuels while meeting compliance by purchasing remedial units instead.
Two forms of the MAC method were set out: one using an energy-weighted average across all ZNZ fuels, and another tied to the most widely available, least-cost fuel.
WSC also flagged concerns about the liquidity of the proposed IMO Net-Zero Fund, suggesting the use of a non-monetary "multiplier" to strengthen incentives without excessive cash outflows.
"Fuel prices fluctuate, reacting to changes in the market and the balance between supply and demand, it states.
" If the Committee decides to set an appropriate reward that is economically efficient, the award amount would need to be established through a methodology based on observation of fuel prices in the market."
The IMO Net-Zero Framework was agreed in principle by member states in April and is set for adoption at an extraordinary MEPC session next month.
The IMO is required to define the ZNZ reward methodology by March 2027, with reviews scheduled every five years.
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| VLSFO | MGO | |||
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| $/mt | +/- | $/mt | +/- | |
| Singapore | 480.00 | 5.00 | 680.00 | 7.00 |
| Rotterdam | 456.00 | 3.00 | 671.00 | 9.50 |
| Houston | 479.50 | 1.50 | 677.50 | 4.50 |
| Fujairah | 481.00 | 1.00 | 730.00 | 0.50 |
| Global 20 Ports Average | 515.00 | 5.50 | 764.50 | 1.00 |
| Global 4 Ports Average | 474.00 | 2.50 | 689.50 | 1.50 |
| Global Average Bunker Price | 549.50 | 3.00 | 804.00 | 1.50 |
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