New policy measures set out by the United Nations-led agency the International Maritime Organisation (IMO) lay the groundwork for a transition to zero-emission fuels but may lack the incentives needed to make e-fuels like green ammonia and e-methanol commercially viable in the near term.
That is according to independent not-for-profit foundation the Global Maritime Forum, which warned that the shipping industry risks delayed adoption of scalable zero-emission fuels unless stronger policy and investment signals are put in place.
“The IMO’s new framework is an historic step forward, but unless e-fuels become competitive early on there is a risk that the sector will run into bottlenecks as … decarbonisation efforts scale up,” said Jesse Fahnestock, Director of Decarbonisation at the Forum.
With the IMO’s net-zero emissions target set for around 2050, he added that “the industry can no longer afford to do nothing.”
The IMO’s mid-term measures, agreed in April and set for formal adoption in October, will introduce global fuel intensity targets from 2028, along with penalties for non-compliance and a system for trading surplus credits.
Total cost of ownership modelling suggests that while liquefied natural gas and ammonia dual-fuel ships are likely to remain cost-competitive until the mid-2030s, green ammonia is expected to become the most economical zero-emission fuel thereafter.
That transition will depend in part on blue fuels – produced using fossil-based hydrogen with carbon capture – but e-fuels will require additional financial incentives to scale effectively.
The Global Maritime Forum argues that relying on blue fuels alone could create a false sense of security and delay the deployment of truly renewable alternatives. Given the long asset lifespans in shipping, investing in dual-fuel vessels capable of running on e-fuels already looks commercially sound, states the Forum.
“Ordering dual-fuel vessels capable of running on e-fuels already looks like a smart decision,” said Fahnestock. “But future adjustments to the policy can do a lot to encourage investment in e-fuel production facilities.”
He added that more targeted incentives, such as higher credit rewards for zero-emission fuels and adjustments to penalty pricing, would be critical in driving early adoption and avoiding costly delays later in the transition.
What’s the cost of decarbonised shipping?
A report from the Forum suggests that around $1 trillion in investments may be needed to decarbonise shipping, which is a sector that could account for approximately 10% of global greenhouse gas emissions by 2050.
If shipping was to fully decarbonise by 2050, this would require extra investments of around $400bn over 20 years, making the total investments needed between $1.2 trillion and $1.6 trillion, according to the Forum.
The estimate is based on ammonia being the main zero-carbon fuel of choice adopted by the shipping industry.
Total investments needed to achieve IMO decarbonization targets and investments needed to fully decarbonize shipping by 2050 ©Global Maritime Forum
However, the industry remains cautious about the safety and infrastructure challenges surrounding ammonia, especially its toxicity and the associated handling risks.
“Some shippers have expressed concerns over the prospect of a switch to ammonia engines,” said Murray Douglas, Head of Hydrogen Research at the analyst and business consulting group Wood Mackenzie.
Speaking to gasworld earlier this year, Douglas said he sees e-methanol as having the strongest near-term prospects of all hydrogen-based e-fuels.
“It’s the most competitive,” he said. “Some of that early e-fuel use in marine is probably going to be in e-methanol, or in some cases green methanol, so maybe a combination of biomethanol and e-methanol.”
While the technologies needed to produce green forms of methanol and ammonia are well-known, they have not been widely deployed. In a 2024 report, the Forum suggested that aggregating demand for zero-emission fuels could play a crucial role in closing the investment gap.
By pooling demand signals – whether through so-called green corridor initiatives, collective offtake agreements, or long-term procurement frameworks – shipping stakeholders may help create more bankable conditions for fuel producers and infrastructure developers.
