Affordability has entered the negotiation, LNG is the fuel best placed under a compromise, and lifecycle accounting rules will decide more than the choice of framework itself
The alternative decarbonization framework put forward by Liberia, Panama and Argentina lacks the support to pass in its present form. Nevertheless, its influence on the final outcome may prove considerable all the same.
That is the assessment of Ryan Harb, board member of the American Biogas Council, in a report published this month by Oil & Gas IQ ahead of its LNG Bunkering North America Summit. A group of member states backs the proposal. More would need changes before supporting it, in his reading, which leaves it without the votes for adoption as written.
What the proposal has done is push three questions into the center of the negotiation: what compliance will cost, how much qualifying fuel exists, and how quickly supporting infrastructure can be built. Affordability, availability and scalability are the terms Mr. Harb uses, and he treats the first as the most consequential. A framework pitched too high risks pushing costs onto consumers at a time of inflationary pressure, which invites political resistance.
Where the two approaches part company
The IMO’s draft Net-Zero Framework is built to bring shipping into line with the organization’s long-term climate objectives. It tightens lifecycle greenhouse gas intensity over time and pairs that with an economic mechanism intended to steer investment toward lower-carbon fuels.
The alternative works from the opposite direction. It sets fuel intensity targets based on pathways that exist today and revises them as the market develops, aligning the regulatory ask with what the industry is ready to deliver.
That design is also its weakness in the view of many delegations. Mr. Harb’s own criticism is that the proposal offers no clear route to net zero by around 2050, which is why a number of governments regard it as falling short of the IMO strategy.
What LNG has going for it
Under a framework weighted toward cost and readiness, LNG performs well on every measure. The fuel is available at more than 200 ports worldwide. More than 1,000 LNG-fueled vessels are in operation. Pricing holds up against conventional marine fuels, the international value chain is established, and operators have years of experience running the ships.
On that basis Mr. Harb rates LNG “the clearest winner” under the proposal as written. However, he does not expect it to pass in that form.
The decisions that will matter more
Several questions remain open inside the Net-Zero Framework itself, and they carry more weight for the fuel mix than the headline contest between the two texts.
Adjustments to the GFI reduction trajectory sit at the top of the list. Below that come the lifecycle assessment methodology, the treatment of biomethane, credit for avoided methane emissions, and the question of which alternative fuels qualify at all. Together these determine how demanding the framework proves in practice and how compliance costs develop through the 2030s.
The implication for LNG stakeholders is that the long-term competitive position of the fuel may depend less on which proposal prevails and more on how these technical points are settled inside the final text.
Renewable methane and the cost of compliance
Shipowners will gravitate toward the fuel that delivers the lowest cost of compliance. That principle puts bio-LNG and renewable natural gas in an interesting position, since both can run through infrastructure that already exists while delivering substantially lower lifecycle emissions.
Bio-LNG could compete strongly if lifecycle accounting recognizes avoided methane emissions and permits very low or negative carbon intensity scores. Should other alternative fuels be excluded or handled harshly on their CI values, demand for bio-LNG could rise sharply. Small changes in methodology carry outsized effects here. Certification rules, methane accounting and credit recognition feed into project economics, and investment decisions follow the signal. For suppliers, operators and infrastructure developers, the technical working papers may deserve as much attention as the political negotiation.
The U.S. point of view
The United States supplies more than 35% of global LNG exports and looks set to remain among the leading suppliers, but the larger maritime opportunity may lie beyond exports. A framework that continues to recognize LNG and renewable methane pathways would support investment along the marine fuel chain, bunkering infrastructure, vessel capacity, liquefaction projects and fuel distribution. Small-scale liquefaction could form part of that build-out, and larger export terminals could find a route into bunkering markets over time.
The scale of the opportunity remains open. Fuel economics, long-term demand, national maritime policy and the final regulatory structure will all bear on it, and policy certainty could very well end up being the decisive factor.
Compromise, and the alternative to it
Neither text looks likely to survive unchanged. Mr. Harb expects negotiation toward a middle ground that keeps the long-term decarbonization objective while making implementation workable, and he is optimistic that a global standard will emerge.
The outcome he warns against is failure to agree at all. That would leave a patchwork of regional and national systems, with different rules in Europe, Asia and North America, and higher complexity and cost for every operator caught between them.
For anyone tracking the process, the list of things to watch is the GFI reduction trajectory, the lifecycle assessment methodology, methane accounting rules, recognition of biomethane, the structure of compliance costs, and the investment signals all of it sends. The balance governments strike between ambition, affordability and fuel availability will set both the pace of maritime decarbonization and the role LNG plays in it.
Source: “IMO Net-Zero Framework vs. Liberia Proposal”, published by Oil & Gas IQ (IQPC)
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