Hydrogen industry participants have expressed disappointment about the International Maritime Organisation's vote late last week to delay adoption of a net zero framework (NZF) for one year, and they are pinning their hopes on the EU.
A majority of delegates at the extraordinary Marine Environment Protection Committee (MEPC) session voted on a motion tabled by Saudi Arabia, following days of discussions and intense opposition from the US. The framework would establish a pioneering carbon pricing mechanism for shipping sector greenhouse gas (GHG) emissions.
Member states will continue to discuss how to implement NZF, IMO secretary general Arsenio Dominguez said after the vote, but the delay means more uncertainty for a sector that is yearning for regulatory incentives to take final investment decisions on production projects.
E-fuels industry participants "were banking on the IMO delivering strong market signals but instead received another year of uncertainty," said Skies and Seas Hydrogen-fuels Accelerator Coalition (Sasha) EU policy director Aurelia Leeuw.
The moment calls for stronger and clearer decarbonisation policies set at regional and national level, especially in the EU, Leeuw said.
Brussels-based climate group Transport & Environment (T&E) urged the EU to "continue to strengthen" its shipping decarbonisation framework, the FuelEU Maritime text, "which now stand as the only substantive regulations to tackle shipping emissions in the void left by the IMO NZF".
FuelEU Maritime requires GHG intensity cuts for bunker fuels of 2pc in 2025, 6pc from 2030, 14.5pc from 2035, 31pc by 2040 and 80pc by 2050.
Beyond this, the EU should introduce "robust revenue support for e-fuels, mandates for zero emission vessels and assurances to extend the EU ETS in 2026" in its upcoming Sustainable Transport Investment Plan (STIP), Leeuw said. The UK should move ahead with its Maritime Decarbonisation Strategy, which is aligned with the IMO's GHG strategy, and establish an "ambitious domestic fuel regulation," Leeuw said.
Policy initiatives in any jurisdiction should "exclusively target the lowest emission solutions like e-fuels", which provide more emissions reductions benefits and are more scalable than biofuels but need more support, Leeuw said.
For some developers the FuelEU Maritime regulation "has been the real driver of action in shipping," even more than the expected IMO NZF, according to Ireland-based developer ET Fuels chief executive Lara Naqushbandi.
"Early post-vote conversations with customers suggest they will shift from waiting for IMO clarity to now 'getting on' with ensuring FuelEU compliance," Naqushbandi told Argus.
ET Fuels recently started front-end engineering design for an e-methanol project in Texas. The developer has "a firm timeline to production and a clear pathway to secure full IRA [Inflation Reduction Act] tax credits", with the project expected to start operating in 2030 and serve customers in the EU, Naqushbandi said.
Some said this is an opportunity for the private sector to show leadership, as the policy lead is lacking.
"This moment isn't about failure; it's about realising how much still depends on us", said Dutch clean shipping design firm Aurelia's chief executive Raffaele Frontera. "When politics and legislation move too slowly, courage must come from elsewhere." Aurelia is a partner in the EU-funded Seastars initiative, which seeks to accelerate adoption of emissions-reducing technologies in shipping.
