- Spiegelenberg highlights the need for guidelines on fuels, rewards, and certification.
- Penalties projected to raise $11–12 billion annually by 2030 for transition funding.
- Early e-fuel adoption hinges on strict accounting and fair reward mechanisms.
The Global Maritime Forum (GMF) has put out a new paper that dives into the upcoming adoption of the IMO’s Net-Zero Framework (NZF), set for October 2025, and the necessary steps to transition to zero-emission shipping, reports Safety4Sea.
Implementation Challenges and Guidelines Needed
Femke Spiegelenberg, Project Manager at the Getting to Zero Coalition within the Global Maritime Forum, points out that as the IMO gears up for the NZF adoption in October 2025, with measures kicking in by 2027, there’s still a need for clear guidelines to support its implementation. This includes defining what zero- and near-zero emission fuels are, creating incentives for their use, establishing emissions accounting and certification for different fuels and production methods, and managing a central fund to facilitate the transition.
Funding and Penalties to Support the Transition
The penalties associated with the NZF are projected to bring in around $11–12 billion each year by 2030. This funding could be used to encourage the adoption of e-fuels and ensure a fair and just transition. While hitting the 5% target is crucial, achieving it hinges on rigorous life cycle environmental accounting, overcoming the scalability challenges of fuels, and directing rewards towards the options necessary for large-scale zero-emission shipping.
“Successfully managed, the rewards can unlock early offtake and ensure a level playing field for the fuels of the future, ensuring e-fuels can compete with transitional fuels such as biofuels and LNG and become a growing portion of the global fuel mix.”
The Fuel Challenge: Bringing Stakeholders Together
The shipping industry’s shift towards new fuel sources relies heavily on getting shipowners, fuel producers, and investors on the same page. Right now, the e-fuel market is stuck in a “chicken-and-egg” situation, with conflicting interests at play. E-fuel producers are grappling with hefty capital demands, rapidly changing technology, and uncertain returns, which makes committing to long-term investments feel like a gamble without solid multi-year offtake agreements.
On the flip side, fuel offtakers are under pressure to decarbonise while keeping costs in check. They tend to favour short-term commitments and need clear regulatory frameworks before they’re willing to invest. Meanwhile, investors are chasing high returns in a short span, often looking for pre-sold offtake agreements and leaning towards partners with robust financial health.
Designing a Reward Mechanism
The NZF’s reward mechanism is built on two main pillars: determining which fuels qualify and how to set the reward levels, both of which are crucial for its success.
Setting clear eligibility criteria is essential to ensure that rewards promote scalable zero-emission fuels instead of just funnelling resources into transitional options. The IMO has already restricted rewards to ZNZ fuels, establishing limits of 19 grams CO₂e/MJ until 2035 and 15 grams after that. Some approaches being considered include:
- Technology-focused criteria based on production methods and feedstock.
- Emissions-focused criteria based on the intensity of emissions.
- A hybrid model that combines emissions intensity with designated funds for specific production pathways.
Reward-Setting Mechanism
There are various ways to determine reward levels:
- Administrative setting by the IMO based on the type of fuel.
- Auction-based methods, where bids dictate the level, usually favour the lowest offer.
- A hybrid approach that mixes administrative or auction elements with external factors like contracts for difference.
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Source: Safety4Sea
