Sponsored By

Goal-based standard for fuel transition would be too slowGoal-based standard for fuel transition would be too slow

A number of the fuel decarbonisation options being discussed at the IMO will not be sufficient to enable shipping’s energy transition by the 2050’s, says a report.

Paul Bartlett, Correspondent

February 3, 2025

2 Min Read
Credit: IMO

A report released late last week by the UCL Energy Institute, Oceans Research Group, and University Maritime Advisory Services (UMAS), has concluded that the energy transition would require a high GHG price and subsidised e-fuels.

The IMO has meetings scheduled for later this month and in April to discuss and finalise mid-term measures for reducing greenhouse gas (GHG) emissions. However, the consultants have warned that the Global Fuel Standard, a measure to encourage the adoption of renewable fuels and sustainable biofuels, even with a multiplier to boost the credit for e-fuels, is unlikely to start an e-fuel transition before 2040. This will be too late, they warn.

Instead, the research indicates that targeted incentives for e-fuels, such as subsidies or rewards generated from a GHG price or levy, will bridge the price gap between these fuels and transition fuels such as LNG, biofuels, described as low-cost early compliance options, and carbon capture and storage technology. Such an approach will be essential to underpin shipping’s energy transition in the critical period between 2027 and 2035, the study found.

The consultants used a total cost of ownership (TCO) and a 14,000 teu container ship to assess various different fuel strategies. The analysis confirmed that fuel price, technology cost, and performance determine the best outcomes to different policy scenarios, but also revealed how adjustments to those assumptions produce results that differ significantly from those presented in the IMO’s Comprehensive Impact Analysis.

Related:IMO GHG emissions pricing mechanism proposal backed by 47 nations

Dr Tristan Smith, Professor of Energy and Transport at the UCL Energy Institute, commented: “The IMO’s fuel standard is critical for the longer-term certainty of demand, and longer-run investment. But under this policy alone, this new analysis shows that the market will struggle to make an e-fuel business case before 2040, and therefore e-fuels such as green ammonia will not be available for shipping’s use in any volume. Some suggest that the role of a GHG levy is only for addressing equity, this study shows that it is not the only role, it is also a critical enabler of shipping’s energy transition and for minimising the long-run costs to trade.”

Read more about:

IMOGHG emissions

About the Author

Paul Bartlett

Correspondent

UK-based Paul Bartlett is a maritime journalist and consultant with over four decades of experience in international shipping, including ship leasing, project finance and financial due diligence procedures.

Paul is a former Editor of Seatrade magazine, which later became Seatrade Maritime Review, and has contributed to a range of Seatrade publications over the years including Seatrade’s Green Guide, a publication investigating early developments in maritime sustainability initiatives, and Middle East Workboats and Offshore Marine, focusing on the vibrant market for such vessels across that region.

In 2002, Paul set up PB Marine Consulting Ltd and has worked on a variety of consultancy projects during the last two decades. He has also contributed regular articles on the maritime sector for a range of shipping publications and online services in Europe, Asia, and the US.

Get the latest maritime news, analysis and more delivered to your inbox
Join 12,000+ members of the maritime community

You May Also Like