The IMO’s Net Zero Framework (NZF) represents a pivotal moment in marine decarbonization, offering a promising solution to reducing the shipping industry’s carbon footprint. To effectively implement the NZF, the shipping industry needs to develop a deeper understanding of the framework’s key components.
- The IMO’s NZF sets emissions reduction targets and provides a framework for measuring emissions.
- It establishes a GHG Fuel Intensity (GFI) standard to encourage the adoption of cleaner fuels.
- The framework includes a GHG pricing mechanism to incentivize fuel suppliers and shipowners to adopt cleaner fuels.
The NZF builds upon previous IMO regulations, combining the mandatory emissions reduction targets with a focus on reducing emissions from fuel combustion. These efforts have the potential to significantly reduce emissions from ships.
A Critical Gap in the NZF: Incentivization
The IMO’s NZF represents a significant step forward for the shipping industry, but there remains a crucial gap in terms of incentivization.
To create a strong incentive to adopt cleaner fuels and meet sustainability goals, the IMO must set a clear reward for ships using ZNZ energy sources. The proposed value of this reward is currently too uncertain, as it is based on price projections from 2027.
This lack of clarity creates a blind spot for shipowners, who must make long-term investment decisions while navigating the significant cost gap between conventional and ZNZ fuels.
WinGD believes that a decision is needed far earlier to give energy providers sufficient run-in time to scale up ZNZ fuel production and for ship operators to make their fuel decisions and plan investments accordingly.
Clarifying the Reword for Vessels using ZNZ energy sources
One of the primary goals of the IMO’s NZF is to provide a clear and timely signal for vessels using ZNZ energy sources.
The IMO has proposed that the reward value will be determined on 1st March 2027, just nine months before the rules come into effect.
However, the proposed financial reward for vessels using ZNZ energy sources has yet to be priced, leaving shipowners without a clear understanding of the costs and benefits.
WinGD is calling on the IMO to clarify this value, as the lack of certainty creates a blind spot for shipowners, who must make long-term investment decisions based on uncertain information.
Evolution of Fuel and Engine Technology
The IMO’s NZF relies on default emission factors rather than measured emissions, both for fuel production and distribution, and its use (well-to-tank and tank-to-wake).
This approach locks in historic values that do not reflect ongoing efforts by fuel producers, technology providers, and fuel users to minimize emissions.
The IMO has approved procedures for operators to use certified and measured emissions instead of default factors.
However, this adds complexity and burden for equipment makers and operators, including conducting measurements and filing documents to verifiers.
WinGD believes that the IMO should revise the NZF to prioritize measured emissions over default factors to stimulate innovation and reduce emissions.
Penalties and Emissions Intensity
The IMO’s NZF also sets penalties for emissions based on the GHG fuel intensity of fuels used by vessels.
In some cases modeled by WinGD, this can lead to paradoxical situations where engines that produce lower overall emissions – and fuel consumption – are penalized for emitting less.
The fact that a solution with lower total GHG emissions and fuel consumption can be penalized for emissions intensity opens the door to the risks of greenwashing.
Emissions Intensity: A Misleading Measure
Emissions intensity has been proposed as a measure of the environmental performance of vessels, but it has its limitations.
This measure can be misleading, as it fails to consider the overall impact of an engine or fuel on the environment.
WinGD calls for the IMO to reconsider this measure and prioritize measures that reflect the actual emissions reduction capabilities of a vessel or engine.
The Path Forward
The IMO’s Net Zero Framework represents a significant opportunity for the shipping industry to take a lead in addressing one of the world’s most pressing challenges.
To realize this potential, the shipping industry needs to develop a deeper understanding of the framework’s key components and create a stronger incentive to adopt cleaner fuels.
WinGD is committed to playing a key role in this effort, using its expertise to help shipowners make an early transition to clean fuels and meet their sustainability goals.
The Net Zero Framework: Turning Promise into Action
The IMO’s Net Zero Framework holds great promise for reducing the shipping industry’s carbon footprint.
Key Points
- The IMO’s Net Zero Framework sets emissions reduction targets and provides a framework for measuring emissions.
- The framework establishes a GHG Fuel Intensity (GFI) standard to encourage the adoption of cleaner fuels.
- The framework includes a GHG pricing mechanism to incentivize fuel suppliers and shipowners to adopt cleaner fuels.
- Clear rewards and penalties are essential to incentivize shipowners to adopt cleaner fuels and meet sustainability goals.
A Better Future for Shipping
The IMO’s Net Zero Framework is a key step towards a more sustainable shipping industry.
However, clarity is needed on the reward values and emissions calculations to ensure that the initiative realizes its potential.
WinGD is calling on the IMO to develop a stronger incentive structure and to revise the NZF to prioritize measured emissions over default factors.
Together, we can unlock the potential of the IMO’s Net Zero Framework and create a better future for shipping.
A better future for shipping is a brighter future for all of us. If not designed correctly it can lead to the shipping industry missing a crucial carbon peak by failing to adopt a meaningful climate response.
The proposed Net Zero Framework and its proposed mechanisms hold a great deal of promise but can be misinterpreted if not correctly managed.
A Key Role for WinGD
WinGD will play a key role in helping shipowners make an early transition to clean fuels and meet their sustainability goals.
The Importance of Timing
WinGD is committed to making early transitions to clean fuels a reality, and we believe that this must be done promptly.
There is no time to waste, and the IMO must clarify the value of the reward for vessels using ZNZ energy sources as soon as possible.
The Industry Must Wait No Longer
The IMO must now act to provide clear and timely signals to shipowners and to help them make informed investment decisions.
WinGD calls on the IMO to take bold action to unlock the potential of the Net Zero Framework and create a better future for shipping.
Let us not wait; the future of the shipping industry depends on it.
