The shipping industry faces significant challenges in meeting the International Maritime Organization’s (IMO) 2030 target for zero-emission fuels due to ongoing regulatory uncertainty. A report from the UCL Energy Institute and Getting to Zero Coalition highlights that while infrastructure and vessel capacity for alternative fuels like methanol are advancing, the momentum is stalling amid weaker demand and policy signals.
Regulatory Framework Delays
At the core of the problem is the IMO’s Net-Zero Framework, which was provisionally agreed upon last year but has not yet received formal adoption. This framework aims to create demand for lower-emission marine fuels by implementing progressively stringent greenhouse gas intensity requirements. It also proposed a system wherein higher-emitting vessels would incur charges while those utilizing cleaner energy would receive financial incentives. The uncertainty surrounding its final form has left shipowners, fuel producers, and financiers grappling with crucial long-term investment decisions without clear regulatory guidance.
Impact on Investment and Infrastructure
The recently published report, titled “Climate Action in Shipping: Progress Towards Shipping’s 2030 Breakthrough,” assigns the failure to adopt the Net-Zero Framework as the “single most transition-regressive event” since the report’s inception five years ago. This dilemma is reflected statistically; the capacity of vessels capable of utilizing scalable zero-emission fuels dropped from 9.5% to 5.7% of tonnage over the last year, and shipping-specific sustainable debt issuance declined from $3.4 billion in 2024 to $3 billion in 2025. Such declines occur even as technology advancements continue. The number of ports prepared to offer methanol bunkering grew from 19 to 29, and methanol-capable tonnage in operation has tripled during the same period.
Technological Progress vs. Regulatory Risk
Despite the progress in methanol and ammonia fuel capacities, the lack of decisive demand signals poses a risk to scaling investments necessary to meet the industry’s emission targets. The 2030 milestone mandates that zero-emission fuels should constitute at least 5%, and preferably 10%, of the fuels used in international shipping. Achieving this is vital for the IMO’s larger goal of net-zero greenhouse gas emissions by approximately 2050. Progress assessments indicate that technology and supply for zero-emission fuels are partially on track, but demand, financing, and policy frameworks remain significantly off track.
Why It Matters
The ongoing regulatory uncertainty significantly complicates operational decisions for shipowners, who must commit to new vessels and fuel technologies that will remain in service for decades. With thousands of vessels expected to be ordered in the coming years, decisions about fuel types and engines need to be made against an unclear regulatory backdrop. The IMO’s Net-Zero Framework remains the favored proposal for establishing a cohesive global regulatory environment. However, without consensus among governments on its economic mechanisms, the anticipated shift toward cleaner fuels may remain hindered. Industry stakeholders must closely monitor developments related to the framework’s adoption and other regulatory signals that can facilitate or obstruct the transition to sustainable fuels.
