As IMO member states return to the Net Zero Framework debate, WinGD CEO Dominik Schneiter outlines the elements of an effective global policy for maritime decarbonisation.

There is an apparent disconnect in today’s shipbuilding market. Despite ambitious industry decarbonisation targets, most vessels are currently being ordered to run on fossil fuels; either conventional fuel oil or LNG. And they are being ordered in near-record numbers. What could all those ships – due to hit the water before 2030 and thus likely still trading in the 2050 post-carbon era – have looked like had the IMO’s Net Zero Framework been passed earlier?

That question should be front of mind as negotiators return to the table at IMO’s Marine Environment Protection Committee meeting next month. Thanks to the adjourned vote in 2025, a whole generation of fossil-fuelled vessels will enter service at the same time as the Net Zero Framework was originally due to enter force in 2028. That is not only a missed opportunity, but an additional weight on an already burdensome decarbonisation challenge.

As the run-up to the 2050 target shortens, owners will need to cut emissions faster, from both existing and newbuild ships. That means higher costs, because more expensive fuels with higher emissions reductions will be needed, and because retrofitting ships inevitably means more capital investment. And that in turn means higher penalties and incentives will be needed to discourage the operational status quo, increasing the cost of decarbonisation across the whole industry.

As the MEPC reconvenes, IMO member states will be acutely aware that another delay would mean a missed opportunity to influence another generation of ships. And that every delay makes maritime decarbonisation more costly again.

Excluding the added cost and urgency, nothing has changed in what the industry needs from its global decarbonisation policy; clear, fair and robust measures that incentivise the kind of fuels and technologies we need to take us towards net-zero emissions – and with the capability of spurring the huge, immediate investment that this endeavour will require in fuel production and industry uptake.

Technology is not a limiting factor. We have engine designs already in service that can use renewable versions of diesel, methane, ammonia, methanol, ethanol and LPG. What is needed now is the clarity on how those fuels will be treated under carbon pricing – enabling shipowner decisions both for vessels already in service and for those yet to be ordered.

Throughout the drafting of the Net Zero Framework, some essential factors have been put aside for later debate. A reward for using zero or near-zero emissions (ZNZ) fuels has yet to be quantified, and too many gaps in emissions accounting guidelines remain for owners to take informed decisions on the impact of fuel choices. Except in isolated cases, we still have little idea of the cost implications of using any particular ZNZ fuel under the NZF regime.

WinGD’s perspective remains the same: a clear reward for ZNZ fuel use, and remedial units based on measured emissions rather than generalised emission factors, are the fundamental building blocks of an effective regulatory regime. In our recent report illustrating capital and operating expenses for ships retrofitted for ZNZ fuels (Fuel Economics Report - Alternative fuel retrofits: A CAPEX, OPEX and payback illustration), we also examine the impact that various proposed amendments to NZF would have on those costs.

Current ship ordering shows how, in the face of regulatory uncertainty, owners will rationally choose to maintain the status quo. One perspective is that this approach maintains flexibility for the adoption of renewable drop-in fuels or for future conversion of ship engines to run on ZNZ fuels. That makes sense, but those measures will still rely on timely policy to reduce costs.

A more pessimistic interpretation of continued ordering for fossil fuels is that shipowners no longer believe an effective global regime incentivising ZNZ fuels will emerge. We must hope that this is not the case, and that MEPC85 will restore any lost faith in the power of global policy to effect meaningful climate progress.