The Week in Alt Fuels: Ambition deferred

Some celebrated a victory for multilateralism this week. But ambition lost, and while the IMO’s climate compromise includes a pricing mechanism, it raises tough questions on equity and impact.

IMAGE: This week's MEPC 83 meeting at the IMO headquarters in London. X of @IMOHQ

IMO’s MEPC 83 concluded yesterday with a framework finally approved after weeks of stalled negotiations. It wasn’t adopted by consensus. After disagreement between various member state factions, it was put to a rare majority vote.

The IMO's Net-Zero Framework includes a pricing mechanism. But it isn’t the flat-rate levy many climate advocates and climate-vulnerable nations were hoping for.

Instead, member states backed a compromise two-tiered greenhouse gas (GHG) intensity reduction plan, designed to progressively cut ships' well-to-wake GHG intensities from 2028 onwards.

The targets will tighten towards 2035, when ships will be required to trim the GHG intensity of the energy they use by 30–43% compared to 2008 levels. Targets beyond that have not been set, but the framework includes a 65% base reduction ambition for 2040.

Experts warn that the mechanism will do too little, too late. Formal adoption is expected in October.

Emission omission

A major concern is that a large share of emissions will escape accountability.

“The pricing mechanism is not strong enough to incentivise ships to transition away from fossil fuels and towards green alternatives, with as much as 90% of emissions potentially exempt,” Aoife O’Leary, founder of Opportunity Green and the SASHA Coalition told ENGINE.

Transport & Environment’s (T&E) shipping director, Faïg Abbasov agrees: the plan “exempts nearly 90% of shipping emissions from penalties on excess emissions via remedial units.”

Compounding the concerns are unresolved gaps in lifecycle analysis (LCA) guidelines that underpin the regulation.

The International Council on Clean Transportation had flagged that methane emissions from LNG are underestimated, nitrous oxide emissions from ammonia engines are omitted and indirect land-use changes linked to biofuels are unaccounted for.

Critics warn these gaps could encourage short-term fixes or create loopholes.

“The IMO is not just failing on climate - it’s actively enabling a methane lock-in,” said Elissama Menezes, director of Equal Routes. She warns that the framework could entrench fossil LNG use, despite its methane footprint.

Abbasov also warns that the deal could promote “forest-destroying first-generation biofuels.” Without strong incentives for green hydrogen-based e-fuels, “it is impossible to decarbonise this heavy polluting industry,” he said.

The framework fails to send a clear signal to incentivise e-fuels and instead “locks in methane use by not restricting fuels such as LNG,” John Maggs, Clean Shipping Coalition’s representative at the IMO said.

Ambition outpaced by reality

Some argue that the deal will not enable shipping to meet the IMO’s own 2030, 2040 and 2050 goals.

“The framework will not be enough to meet any of the IMO’s targets,” O’Leary notes, “The IMO has undermined its own commitments made a mere two years ago.”

The targets are too low and close to a “business-as-usual” scenario, and they will not help the IMO meet its own 2030 targets, Maggs said.

That's because the GHG reduction targets the IMO set in its 2023 strategy will require ships to switch to near-zero-emission fuels - like e-methane, green ammonia and e-methanol. But many fear that this week's approved framework will fall short of generating the revenue needed to scale their production.

Funding gap risk

T&E's Abbasov estimates it could raise around $10 billion/year, but says it won’t be enough to meet energy demand for ammonia- and methanol-ready ships already on order.

The Global Maritime Forum (GMF) shares this concern. The current draft “creates significant stranded asset risk and delayed investment case” for net-zero emission fuels, it said, and fails to support early adoption of scalable zero-emission fuels.

Instead, shipowners are left with transitional options like LNG and biofuels, or blending net-zero fuels with fossil alternatives, leaving investment into new technologies uncertain.

“With unambitious prices and so many emissions evading capture, the measures will not produce enough revenues to build up ZNZ [zero- and near-zero emission] fuels,” O’Leary added.

“This is a dire missed opportunity for green hydrogen e-fuels... Instead of channelling much-needed investment to their production, IMO measures open the floodgates to biofuels, heralding fresh incentives to deforestation, with food security and biodiversity at serious risk,” she said.

"Not enough emission reductions, not enough emissions priced, not priced high enough, not enough revenues,” Bastien Bonnet-Cantalloube of Carbon Market Watch stressed. “By ignoring the problem, the IMO won’t make it disappear.”

Regional action needed

GMF warns that without a “balanced combination of GHG pricing, fuel standards, and revenue-use elements,” the framework risks worsening global inequality and delaying availability of zero-emission fuels.

A broader consensus is now leaning toward regional and national action.

“The refusal to adopt a 1.5°C-aligned carbon levy has left the least developed behind,” Menezes said. “While methane-based fuels face growing scrutiny globally, the IMO is effectively leaving it to others to regulate their climate impact.”

Abbasov added: “The ball is now in the court of individual countries. More ambitious regional and industry measures are now essential to make up for what was lost here.”

In other news this week, US-based ammonia producer CF Industries partnered with Japan’s Mitsui and JERA to build a blue ammonia plant in Louisiana, US. The proposed plant is expected to have a nameplate capacity of 1.4 million mt/year of blue ammonia. Construction is scheduled to begin in 2026, with production expected to start in 2029.

Japanese shipping company Mitsui O.S.K. Lines (MOL) plans to install a wind-assisted propulsion system on an LNG carrier. The vessel will be equipped with two hard sails that harness wind energy to help power it forward and reduce its fuel consumption.

By Konica Bhatt

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