Decarbonisation now depends on one key detail

THE success or failure of the International Maritime Organization’s new green regulation will depend on how the IMO sets its lifecycle assessment (LCA) guidelines.

The landmark “net zero framework” would charge ships if they fail to reduce the carbon content of fuel in line with set thresholds.

The rules would also subsidise zero or near-zero carbon (ZNZ) fuels, to make them cheaper relative to fossil fuels. But which fuels will qualify?

That’s where the LCA guidelines come in. The lifecycle assessment refers to how the IMO counts the total emissions associated with a fuel from production to combustion; effectively how green each fuel is in the eyes of the law.

They would assign each fuel — for example, biomethane or e-ammonia — a number in grams of CO2 equivalent per megajoule of energy. This number is used to measure compliance.

But the guidelines are also vital to the business case for e-fuels, the greenest and most expensive option to decarbonise shipping. These are made by combining hydrogen made from renewable power with either nitrogen (to make ammonia) or captured CO2 (to make e-methane or e-methanol).

Experts argue the IMO must set specific rewards for using these fuels, or no one will invest the time and capital to make them at scale.

That would mean the industry only has biofuels, which will be scarce, expensive and in some cases environmentally dubious.

“The most important thing in all of this is the LCA,” Cargill head of decarbonisation Keith Dawe said on a Global Maritime Forum webinar.

“If you make a mistake on the guidelines you can adjust them.

“But if you set the industry on the wrong path with an LCA that isn’t doing its job properly, that’s a problem that will last for quite a while.”

Anthony Wang, chief technology officer of e-methanol start-up ET Fuels, said: “Having a robust, stringent, transparent LCA framework is number one.”

Wang said that meant stringent sustainability criteria around direct and indirect land use change, adequate well-to-wake upstream emission factors, and a robust chain-of- custody and certification process.

He said e-fuel subsidies or a compliance multiplier, such as that seen in Europe’s FuelEU Maritime regulation, would also help.

IMO watchers have stressed the net zero framework is an important milestone in the global fight against climate change, despite its low targets and weak penalties.

But it is unclear so far whether e-fuels can ever become a reality without such extra help, because the IMO’s penalties are not high enough to make them economical.

Höegh Autoliners EU policy analyst Silva Hoffmann said she had hoped for a more ambitious rule to narrow the price gap with fossil fuels.

“We’re still uncertain about how close it will actually bring us,” she said. “But we’re now getting to a point where we can make some more educated guesses than we could before.”

Hoegh Autoliners has four ammonia dual-fuel PCTCs due for delivery in 2027 and 2028.

Hoffmann said whether it would run them on green ammonia would mostly depend on its price, but also on the availability of bunkering infrastructure.

“In the beginning, it’ll be enough with one, two key ports when we only have four vessels,” she said. “But down the line we do need a larger infrastructure network.”

“So now the question also remains: how much does this framework incentivise the build-up of both fuel production and infrastructure?”

Dawe said he was optimistic about the IMO agreement. For all its imperfections, the most important part was its base compliance target, of 65% carbon intensity reduction by 2040.

“That 2040 point is the centre of our universe now, and it’s very hard to achieve,” he said.

Dawe said companies would phase in biofuels and wind-assisted propulsion at first, then new fuels such as methanol later.

“It’ll be a multi-fuel future that we’re going into towards those sharper decarbonisation targets later in the next decade,” he said.

“We’ve got the economic measure, we’ve got a really good decarbonisation trajectory, and now we need the LCA to make sure we all focus on doing the right thing together.”

The LCA guidelines will be hashed out in intersessional IMO meetings this year before the MEPC in October, when the entire regulation is up for formal adoption. If adopted, the rules would enter into force in 2027.

# Decarbonisation #Sustainability #Technology #Innovation #IMO #InternationalMaritimeOrganization #Cargill #HöeghAutoliners #LifecycleAssessment #LCA #ZNZ

Lloyd's List Daily Briefing 25 April 2025