Publication details
Publication date: 27.03.25 Cite as: Baresic, D., Prakash, V., Smith, T.W.P., Majidova, P, Rehmatulla, N. (2025), Implications of potential IMO policy outcomes on enabling shipping’s energy transition, London, UK
Summary
The Revised 2023 IMO GHG Strategy requires shipping to switch to zero and near zero (ZNZ) GHG fuels over the coming two decades, including an ambitious near-term target of up to 10% of the fuel mix coming from ZNZ fuels by 2030. Ships should therefore by then have the capability and willingness to use those fuels, and markets should be able to provide sufficient supplies of those fuels. The prevailing policy from the IMO therefore has a critical role in sending the right signals to the industry to ensure that there is a steady, predictable, and sustainable increase in the availability and use of ZNZ fuels. This report outlines some of the potential implications of the now three main candidate policy options following the last IMO ISWG-GHG meeting in February 2025 (ISWG-GHG 18) in stimulating such an energy transition.
Much of the details of the policy scenarios remain up for debate, but UCL analysis shows that IMO member states are coalescing around three main policy scenarios; i. an attempted bridging option put forward by the chair at ISWG 18, often referred to as ‘J9’ or IMSF&F with multiple GFS/RU bands (henceforth, IMSF&F with banded RUs) that does not have a levy component, ii. a weak or low levy with GFS, iii, a strong or high levy with GFS. The majority of political support appeared to be behind the two levy with GFS options (see previous readouts from UCL)1. Previous work also shows that only targeted subsidy for e-fuels, coupled with a GHG levy, would ensure e-fuel early adoption2.
Authors
Domagoj Baresic
Vishnu Prakash
Tristan Smith
Pinar Majidova
Nishatabbas Rehmatulla